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10/15/08

EU-Digest: EU takes historic step and seizes the initiative for the construction of a new and fair world economic order


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EU takes historic step and seizes the initiative for the construction of a new and fair world economic order

This Thursday, the 27 member European Union leaders will call for a supervising body to oversee the world's 30 largest financial companies, among other sweeping changes to the global economic order. This was disclosed today as the EU political leadership began a two-day meeting to consider further steps to tame the global financial crisis, and will agree to expand a rapid action plan the U.K. and 15 euro-zone countries drew up Sunday to other countries in the bloc.

With the U.S. temporarily hobbled by the approaching election, the majority of E.U. politicians see a once-in-a-generation opportunity to seize the initiative, and play a major role in the construction of a badly needed new and fair economic order. Drawing heavily on proposals made earlier in the week by U.K. Prime Minister Gordon Brown, the leaders will call for the overhaul of the Bretton Woods system, an outdated US designed global financial framework which has existed since 1944.

The Europeans want to hold a meeting of leaders from around the globe to get the process underway after the U.S. presidential election. "I've proposed an international summit by the end of the year, preferably in New York, where all these problems started," French President Nicolas Sarkozy said in his opening address to the meeting. France holds the rotating presidency of the EU for the six months ending December, and Sarkozy is chairing the meeting of leaders. Sarkozy added that he wants to see financial supervision extended to hedge funds, and to eliminate offshore financial centers.

Long derided for its lack of maneuverability, the E.U. has surprised observers by responding decisively and coherently to the sharp declines in share prices that accompanied rising fears about the viability of the bloc's banking system in recent weeks.

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