www.Kremlin.ru
November 15, 2008
[Medvedev] Speech at the G-20 Summit
DMITRY MEDVEDEV: Good afternoon, ladies and gentlemen, colleagues,
I give my greetings to you all.
I would also like to thank George Bush for this summit’s excellent organisation.
The negative trends on the global market are gathering momentum. Despite the unprecedented measures governments and central banks have taken, the crisis is spreading into the real sector of the economy. We can combat it effectively only if we come to a common understanding of its causes and mechanisms.
All of the speakers have tried to establish a diagnosis of this crisis. This is a question that requires deep and thorough study. I want to say that comparisons with past crises do not hold up. What we face now is not the Great Depression of the 1930s, and not the crises of the 1970s-1980s. This is a twenty-first century global crisis.
In my view, it shows that a number of the principles underpinning the post-war economic world order no longer work today. We see that many of the international institutions and organisations (including security organisations) established at that time are no longer able to cope with today’s demands. This is why we need new ideas for today, ideas just as powerful as those put forward decades before to address the challenges of the post-war period.
First, we will need to reorganise the entire international financial architecture, make it more open and fair, more effective, and give it a stronger legal base. We need to strengthen the role of existing organisations and at the same time establish new collective global coordination and regulation organisations.
Second, our organisations should be based on harmonised standards of national and international regulation institutions, democratic and evenly spread responsibility for decision making, transparent action by all participants, and fair distribution of risks. Without this it will be impossible to ensure effective cooperation and make sure that individual countries’ economic strategies are compatible with each other.
It is important that the new regulation principles not lead to over-regulation and put a brake on financial innovation, which would only end up slowing down economic growth. We need to maintain the balance between correcting the problems on the financial markets and creating incentives for development. In order to provide support at expert level for the reform process, I propose setting up an international commission made up of influential and independent ‘finance gurus’.
Of the proposals that I have already sent to all of the colleagues present today, I want to note four points in particular.
First, the principles for reforming the international regulation institutions should be set out in the form of international agreements. This will give their work legitimacy. We need to define as clearly as possible the role of the global and regional regulation institutions, and also the mechanisms for their interaction. In our view, the G-20 should become the main coordinator of the world financial system’s reform and development. The next summit should be convened no later than April 30. We should also maintain other forms of interaction among the leading countries in the world, above all on global security issues.
Second, we need to establish competent international arbitration institutions.
Third, countries that are supporting pillars of the system overall should keep to general macroeconomic demands in the areas of budget, monetary and credit policy. We need to reach agreements on these basic demands. This particularly concerns the countries that issue reserve currencies. The more such countries there are the more stable the world financial system will be.
Fourth, we need a risk management system based on the principles of maximum transparency, accountability and suitability to modern financial technology. We should change the way the activities of ratings agencies, audit companies, stock exchange trading and offshore zones are regulated. Harmonisation of existing national and regional accounting and reporting standards and standards for evaluation of financial sustainability and risks should form the backbone of this reform.
Another important point is that the IMF and the other international organisations should have the resources needed to support the poorest countries that are hardest hit by the crisis and be able to take swifter and more decisive action in this area.
Russia is taking the necessary measures to overcome the crisis. We support the declaration. It reflects the majority of the problems and takes into account all of our concerns. We can work together to overcome these problems.
Thank you for your attention.