Friday, 7 November 2008

Finland: No to protectionism - Yes to economic reforms

Ahead of yet another summit of European leaders, the Finnish government has issued a statement on its view on how to reform the international financial system and to overcome the economic downturn.

Protectionism is seen as a wrong turn. Instead, structural economic reforms of the kind envisioned in the Lisbon agenda are perceived as necessary, and the European Union should not let its climate targets slip.

Here is the text of the government’s press release:

Government Communications Unit
7.11.2008 11.16

Meeting of EU Heads of State or Government on financial architecture on 7 November
France, the current holder of the EU Presidency, will organise an unofficial meeting for the EU Heads of State or Government in Brussels on 7 November. Prime Minister Matti Vanhanen will represent Finland at the meeting.

The purpose of the meeting is to prepare the EU’s position for the upcoming international summit taking place in Washington on 15 November which is to discuss the international financing system and regulation of the financial market.

In Finland's view reform of the international financing system should focus on measures that promote the strength and transparency of the financing system. This calls for tighter rules for capital requirements concerning financial institutions as well as such rules that neither aggravate the cyclic tendency of the economy nor encourage excessive risk-taking.

As for financial supervision, European-level cooperation and coordination need to be developed to better acknowledge the fact that an increasing number of financial institutions are cross-border entities. The common European central bank system alone requires that the Euro Group has a good understanding of the risks concerning financial institutions.

Outlining the new financial architecture will take its time. It is important for the EU to act in unison. The EU leaders’ meeting will prepare the French Presidency for the upcoming meeting in Washington. The EU needs to have a clear view of how to organise unified action after the Washington meeting as well.

Development of the financial architecture is best carried out at the International Monetary Fund (IMF). This provides emerging economies with better opportunities to participate in the actions of the IMF.

The financial crisis is not over, but it is important that the economic foundations remain open. The crisis is not an excuse for protectionism. The EU Member States need to continue reforms in accordance with the objectives set by the Lisbon Strategy and keep to the climate targets.

Further information: Riina Nevamäki, Special Adviser on EU Affairs, Prime Minister’s Office, tel. +358 9 160 22055 or +358 40 705 2593

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There are two memorandums on the substantive questions available on the government’s web site (in Finnish).


Ralf Grahn