London Calling

In advance of the G-20 Summit in London this week, UK Prime Minister Gordon Brown delivered a speech in St. Paul's Cathedral highlighting the need to reform the global financial regulatory system.  The Prime Minister used his speech to call for a reform of financial regulation that should include 'global rules founded in shared global values'. He said:

'We must reshape the global economic system so that it respects the values we celebrate in everyday life.'  He said the Summit needed to 'clean up the banking system' and set rules to:

1. make transparent the risks that banks take;


2. bring hedge funds and shadow banking inside the regulatory net;


3. ensure banks hold sufficient capital and ensure their liquidity;


4. require boards who understand their business and take responsibility for the decisions they take;


5. ensure pay and bonuses reward people for long term value and not short term risk taking.

The Summit will be watched closely by nations across the globe and some are skeptical that any major decisions will be reached this week.  For example, French President Nicolas Sarkozy is reported to be considering an early departure if key decisions regarding regulatory reform are not made.  The stage is set for an interesting week in London.