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| Version 3 | Version 4 |
|---|---|
| G20 pledges tougher bank action | G20 pledges tougher bank action |
| (30 minutes later) | |
| Finance ministers from the world's most powerful economies have agreed a series of measures to try to regulate the global banking system. | Finance ministers from the world's most powerful economies have agreed a series of measures to try to regulate the global banking system. |
| They want a system that rewards long-term performance rather than short-term risk-taking. | They want a system that rewards long-term performance rather than short-term risk-taking. |
| However the G20 meeting in London did not agree on specific limits on the amounts individual bankers get paid. | However the G20 meeting in London did not agree on specific limits on the amounts individual bankers get paid. |
| Britain, the US and Canada opposed the idea, but the Financial Stability Board is to examine the issue. | |
| It will report back to the summit of G20 leaders in Pittsburgh, Pennsylvania later this month. | It will report back to the summit of G20 leaders in Pittsburgh, Pennsylvania later this month. |
| Critically now the job is to make sure that you translate those principals into practical propositions that actually bite and actually work Alistair Darling | Critically now the job is to make sure that you translate those principals into practical propositions that actually bite and actually work Alistair Darling |
| The G20 countries agreed on measures requiring banks to disclose the pay and bonuses of their highest-paid employees and to allow bonuses to be "clawed back" if decisions which seemed successful later go wrong. | The G20 countries agreed on measures requiring banks to disclose the pay and bonuses of their highest-paid employees and to allow bonuses to be "clawed back" if decisions which seemed successful later go wrong. |
| The FSB has also been asked to look at the desirability of new rules which would allow regulators to rule on whether the total pool of cash set aside by a bank for bonuses is excessive, given its long-term financial stability and strength. | The FSB has also been asked to look at the desirability of new rules which would allow regulators to rule on whether the total pool of cash set aside by a bank for bonuses is excessive, given its long-term financial stability and strength. |
| Signs of recovery | |
| Ministers also pledged to continue financial support for the global economy until recovery from recession is secured. | Ministers also pledged to continue financial support for the global economy until recovery from recession is secured. |
| They said they would develop co-ordinated "exit strategies" to deal with ballooning public deficits once the recession is over. | They said they would develop co-ordinated "exit strategies" to deal with ballooning public deficits once the recession is over. |
| The finance ministers agreed to continue with economic stimulus plans | The finance ministers agreed to continue with economic stimulus plans |
| But they warned that although there were signs of recovery in the world economy, that recovery would not have happened without massive intervention from governments - and all bankers should take note that they owed their salvation to action by taxpayers. | |
| US Treasury Secretary Tim Geithner said the momentum for financial reform needed to be kept up despite the signs of an upturn. | |
| "Actions (by the G20) have pulled the global economy back from the edge of the abyss. The financial system is system is showing signs of repair," he said. | |
| "However, we still face significant challenges ahead. Unemployment is unacceptably high. Conditions for a sustained recovery led by private demand are not yet established." | |
| Concrete proposals | |
| UK Chancellor Alistair Darling said all bankers were obliged "to make sure that their pay practices are responsible". | UK Chancellor Alistair Darling said all bankers were obliged "to make sure that their pay practices are responsible". |
| He said: "Above all we are determined to take action to stop banks or other financial institutions getting themselves into a situation where their pay-and-reward practices actually encourage people to take risks which bring their institutions into a situation where they could be brought down with catastrophic results." | He said: "Above all we are determined to take action to stop banks or other financial institutions getting themselves into a situation where their pay-and-reward practices actually encourage people to take risks which bring their institutions into a situation where they could be brought down with catastrophic results." |
| Discussing possible regulation of bonuses, he said: "If you have got an institution that is struggling or it's in the process of rebuilding itself the regulator could say that pool set aside for bonuses is really too big." | Discussing possible regulation of bonuses, he said: "If you have got an institution that is struggling or it's in the process of rebuilding itself the regulator could say that pool set aside for bonuses is really too big." |
| Mr Darling added: "Critically now the job is to make sure that you translate those principals into practical propositions that actually bite and actually work. | Mr Darling added: "Critically now the job is to make sure that you translate those principals into practical propositions that actually bite and actually work. |
| Gordon Brown: "Too early a withdrawal of vital support could undermine the tentative signs of recovery we are now seeing" | Gordon Brown: "Too early a withdrawal of vital support could undermine the tentative signs of recovery we are now seeing" |
| "We need to have standards that are observed right across the world." | "We need to have standards that are observed right across the world." |
| The US Treasury Secretary added: "Changing compensation practices fundamentally will be fundamental to future reform, and we're going to move forward and do that." | |
| International Reform | |
| International Monetary Fund chief Dominique Strauss-Kahn said that governments had to act. | |
| "The problem is we need to go beyond agreement. We need to have concrete measures." | "The problem is we need to go beyond agreement. We need to have concrete measures." |
| He also announced that the IMF had now collected pledges for all the $500bn additional loan facility that had been agreed in principle at the G20 London summit in April, with Mexico, India and Singapore all chipping in. | |
| But he accepted that the hard questions on how to increase the representation of the poor and emerging countries in the IMF was not yet resolved. | |
| Ministers have agreed to raise "significantly" the say of emerging nations on the world stage. | |
| But concrete proposals will not be put until January 2011. | |
| China has already called for a 7% cut in the voting power of rich countries in the IMF, while the US reportedly suggested 5% - almost all of it the expense of European nations, who are over-represented at the moment. |