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To: Lucretius who wrote (4849)	10/30/1998 3:23:00 PM
From: MoneyPenny	Read Replies (1) \| Respond to of 14427

Any Comments? From Reuters>>G7 Unveils Sweeping Financial Reform Plan 01:10 p.m Oct 30, 1998 Eastern By Alan Wheatley LONDON (Reuters) - Leading industrial nations Friday unveiled a package of far-reaching reforms aimed at shoring up the global financial system and ending the turmoil that has rocked the world economy. The detailed measures, set out in two statements from the Group of Seven countries, aim to keep a tighter check on destabilizing flows of hot money and will give the International Monetary Fund $90 billion in additional firepower to help beleaguered economies stay afloat. ''We must do more to build a modern framework for the global markets of the 21st century and to limit the swings of boom and bust that destroy hope and diminish wealth,'' G7 leaders said in a statement. Britain took the lead in coordinating the package of measures because it currently chairs the G7, which also includes the United States, Japan, Germany, France, Italy and Canada. In Washington, President Clinton called the steps ''very very important'' and would help put a human face on the global economy for those facing hard times in developing economies. ''The world's leading economies have linked arms to contain the financial turmoil that threatened growth not only in emerging markets but in all markets of the world,'' Clinton said at the White House. Financial markets generally liked what they heard with London stocks closing up 1.5 percent and the Dow Jones Industrial Average in New York 1.85 percent higher at 8652.86. ''Whether the measures suggested materialize is the big question, but there is certainly a new willingness to work together. This is positive for markets generally and a step in the right direction for the world economy,'' said Brian Venables, a strategist with ABN Amro bank in London. Through a combination of improved regulation, greater transparency, codes of best practice and a new financial safety net at the IMF, the G7 aims to nip in the bud the type of financial crisis that started last year in Asia and swiftly engulfed other vulnerable emerging markets. ''A new age now requires a new approach and ministers have agreed that in this new interdependent and instantaneous global marketplace we must now create systems for supervision, transparency, regulation and stability that are as sophisticated as the markets they have to work with,'' British finance minister Gordon Brown told a news conference in London. Officials said an early beneficiary of the planned arrangements could be Brazil, which hopes to obtain a precautionary $30 billion line of credit from the IMF and wealthy nations in return for budget belt-tightening. Brazil has become a litmus test of the ability of the G7 to halt the worldwide financial contagion, which has slowed growth, badly dented business and consumer confidence Clinton said newly re-elected Brazilian President Fernando Henrique Cardoso had assured him Brazil would quickly implement an austerity plan involving savings of $84 billion over the next three years to qualify for IMF aid. The G7 was careful not to say the crisis was over even though stock markets have clawed back a good chunk of the steep losses they suffered over the summer. But leaders said they had been encouraged by a number of recent economic developments. Interest rates had been cut in the United States, Canada, Japan and several European countries; progress had been made toward a long-delayed $90 billion increase in funding for the IMF with Congress recently approving America's share. Japan was finally pumping in public money to help its battered banking system, and Asia was laying the foundations of economic recovery. ''These developments have contributed to some improvement in market conditions,'' the G7 said, ''though we still face serious challenges which will take time to resolve.'' The leaders in particular singled out the need for decisive action by Japan, the world's second-largest economy, to climb out of recession. ''A sustained boost to domestic demand...is a precondition for the restoration of market confidence and growth not just in Japan but the whole Asian region,'' they said. The raft of proposals included closer regulation of banks to promote sound capital flows and an examination of the activities of speculative hedge funds, often based in offshore tax havens. Copyright 1998 Reuters Limited. All rights reserved. Republication and redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.>>>