Mexico City: The world should develop an early-warning system that would alert countries to looming financial threats, France’s finance minister said on Tuesday after meeting with her Mexican counterpart.
The proposal was among the ideas French Finance Minister Christine Lagarde discussed with Mexican Finance Secretary Agustin Carstens ahead of a summit in Washington on Saturday for leaders from rich and developing nation on the international financial crisis. She gave no details on how the system would work.
In a joint news conference, Lagarde and Carstens said they agree there should be a globally coordinated response to the financial meltdown that would include stricter government regulation, more supervision of markets, greater transparency, and stimulus packages like that recently adopted by China.
China announced on Monday that it will boost its economy with a near $600 billion package by the end of 2010.
Carstens said the International Monetary Fund needs to be strengthened. He also recommended expanding the Financial Stability Forum, founded in 1999 by the Group of Seven leading industrialized countries with the aim of bolstering the international financial system.
Lagarde, who arrived to Mexico from meetings in Brazil, said the two Latin American countries should be among the countries invited to join the powerful G-7, which has a large say in global economic policy.
Mexico has been hit hard by the economic downturn, with Fitch Ratings on Monday lowering its sovereign credit rating outlook to “negative” from “stable.” A negative outlook means there is a greater chance of the actual credit rating being downgraded.
Many G-20 officials have concluded that major bailout packages in the U.S., Europe and elsewhere have so far failed to re-establish the credit lines and confidence needed to ease the crisis, making additional measures necessary.