“Stage one was to stabilise the financial system with liquidity, recapitalisation and trying to get funds moving for small businesses and consumers,” he said. “Stage two is to make sure that the problems of the financial system, which started in America, do not recur.” The target was to “root out irresponsibilities and excesses” in the system. “We need supervision and regulation where it has been lacking and where it is necessary, and international co-operation. We need an early warning system and proper co-ordination.”
Trabalho de casa:
"In addition he set out four goals for a new Bretton Woods discussion. It should set up a global early-warning system for financial risks; set international standards of regulation; create effective cross-border supervision; and bring new mechanisms for co-operation in a crisis. "
Gordon’s to do list
By the end of the year
— Overhaul system that forces banks to value toxic debt at its present firesale value, which may underestimate its true worth
— Banks to improve risk disclosures
— Banks to use new rules to police their liquidity
— Toughen regime for credit rating agencies
— Force banks to hold bigger stakes in loans they pass on through securitisation
— Set up central clearing house allowing complex derivatives deals to be known to all parties
— Banks’ scope to park questionable investments “off balance sheet” to be reined in
— Set up cross-border coordination of supervision of each big financial group
By spring 2009
— Stronger incentives for banks not to take excessive risks
— Greater transparency to stop dodgy assets being concealed
— Tighten regulation of firms presently not policed
— Understand and police impact of financial dangers on economies
And now, the world
— Set up global early warning system to identify threats
— Impose uniform standards for regulation
— Cross-border watchdogs to supervise multinationals
— Strengthen ways to cooperate in future crises"
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