[ Nippon Keidanren ] [ Policy ]
[ Summary ]
G8 BUSINESS SUMMIT
3 & 4 December 2008

Ready for the Future

The world is currently facing an unprecedented financial and economic crisis that is spreading through every facet of the global economy. This crisis calls for increased consultation and collaboration amongst all nations and for immediate actions to be taken to reverse the decline and restore long-term economic and job growth.

The G-20 Communiqué, released at the conclusion of the Washington summit, recognized the gravity of the situation and the necessity for strong and decisive action. This summit represents a start in the world's response to the unfolding turmoil but we consider there is much to do to complete this response and get back on a path to growth.

Through their national associations, business leaders have been providing advice to our governments on how to move on the need for quick action. We can now present a set of proposals aimed at reestablishing stability and confidence in financial markets, and ensuring future economic stability and growth. By following these plans and principles, policy makers will restore confidence and help companies create jobs and prosperity throughout the globe.

I. A Crisis Which Calls for Open Economy Policy, Innovative Solutions and Solidarity

II. Our Recommendations for Financial Market Reform

Resolution of this crisis starts with the need to reform the financial markets. This reform can only be meaningful, if it allows the financial markets to become, once again, the centres for capital formation needed to drive sustainable economic growth. Such an effort requires enhanced international coordination and cooperation, a balance between, reasonable regulation and innovation, sound evaluation of systemic risk, and appropriate investor and consumer protection.

1. CROSS-BORDER CONSULTATION AND COOPERATION IN THE REGULATION OF FINANCIAL MARKETS

Markets are intrinsically global, yet each national economy has differing forms of capital formation and delivery systems requiring differing forms of regulation. Many of the existing financial regulations have proved inadequate and are one reason for the current situation. Accordingly, adjustments to the regulatory framework are necessary. There is a need for cooperation and consultation so that the national regulators may consult and work together to ascertain systemic risk and ensure the international flows of capital necessary to provide for sustainable world wide growth.

2. THE STANDARDISATION OF INTERNATIONAL ACCOUNTING AND AUDITING PRACTICE

The current crisis demonstrates the true global nature of the world economy. Since accounting is the language of business, it is important that businesses and investors speak in the same language to provide a transparent exchange of information using the highest quality standards. A 21st century system of financial reporting policy must allow accounting and auditing rules to be centred around:

3. THE OVERSIGHT OF RATING AGENCY

The role of the ratings agencies in the development of the financial crisis has created a number of reactions and initiatives on the part of the regulatory authorities, internationally, in the United States and in Europe. Businesses wish to draw the attention of the G8 countries governments to the aspects which they consider to be a priority. When the governments take necessary steps to do the following, negative impacts on corporate finance and additional burdens on private companies may be avoided.

4. TRANSPARENCY REQUIREMENTS OF FUNDS

The growing importance of funds - sovereign funds, alternative management funds and hedge funds - on the financial markets - and, more recently, their role in the financial crisis, has led national and international authorities to consider the appropriate level of transparency required of these funds.
Accordingly, we would recommend a reasonable and appropriate form of transparency for these different funds to allow for appropriate levels of supervision and monitoring by financial regulators. Regulation should not prevent innovation in the marketplace.
As the financial markets play a major role in financing the corporate sector and the economy in general, their current malfunctioning is causing the members of G8 Business to formulate proposals aimed at improving the transparency of funds and re-establishing conditions which favour the efficient functioning of the financial markets.


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