Business News

Crisis turns govts into
major financial players
Agence France-Presse . Dubai

The global economic crisis has turned governments into main players in the financial system with key roles to fill, a World Economic Forum meeting said on Sunday.
‘In the short term, the key actors in the financial systems will be governments, acting both as owners and as regulators,’ said a report issued at the end of a three-day WEF Inaugural Summit on Global Agenda in Dubai.
Governments in the short term will have to ‘determine appropriate government interventions to prevent further contagion and mitigate recession, as well as deploy capital effectively to support critical areas of the economy.’
They will have to ‘communicate their actions to a sceptical public,’ it added.
Governments in major economies, mainly in the United States and Britain, have stepped in to bail out financial institutions that were hit by a severe credit crunch, in an attempt to fight off a looming recession.
The WEF meeting concluded that in the longer term governments should work to establish ‘appropriate international regulatory coordination that is inclusive of all key decision-makers,’ referring to emerging economic powers.
Experts have agreed that ‘the current financial crisis is a failure of corporate governance ... In particular, risk management failed at every level,’ the report said.
They argued that the election of Barack Obama as the new US president and this week’s G20 summit ‘offer fresh opportunities for leadership in reshaping the international financial architecture.’