An effort to revamp the global financial system to better handle future financial crises is off to a good start with general agreement among officials of 22 nations on several key points, participants say.
Deputy Treasury Secretary Lawrence Summers, who led the daylong discussions Tuesday, told reporters late in the day that the officials, representing finance ministries and central banks, had "laid some important groundwork for what will be an international effort going forward."The preparatory talks among lower-level aides were designed to set the agenda for a conference of the same countries called by President Clinton for later this year, probably in April.
"There's no question that our economic well-being and the well-being of all the countries of the world are dependent on this effort," Treasury Secretary Robert Rubin told the officials.
Japanese Vice Finance Minister Eisuke Sakakibara told reporters after the discussions that he believed there was a "common recognition of the source of the problem and how to address it."
Briefing reporters on the discussions, Summers said the group did not reach any specific agreements but had reached general consensus that any solutions had to be based on free markets, increased openness by governments in providing accurate financial data and the "indispensable" role of International Monetary Fund.
The IMF has come under heavy criticism in Congress from both liberal and conservative opponents, who charge it missed warning signs of the Asian crisis and the $100 billion it has assembled to help South Korea, Thailand and Indonesia is going mainly to bail out wealthy banks.
On the bailout issue, Summers said there was a widespread feeling among the officials that ways needed to be found to "bail creditors in and not bail them out" by making them shoulder a major share of any losses caused by bad investment decisions.
Summers told reporters that some countries, including Poland, Russia, Argentina and Mexico, discussed steps they had taken in response to the current crisis, which should prove useful in crafting measures to bolster the current system.
"Compared to discussions between industrialized countries and emerging market countries that would have taken place a few years ago, there was much more light than heat," Summers said.
He said no final positions were taken but that the talks would provide a useful starting point to craft proposals for follow-up meetings Saturday in London among finance ministers and central bank presidents of the world's seven richest countries - the United States, Japan, Germany, Britain, France, Canada and Italy - and in Washington later, probably in April, among the top finance officials of the 22 countries represented Tuesday.
The Clinton administration is fighting an uphill battle to win congressional approval for $18 billion to replenish IMF resources so the agency will be able to handle any future crisis or sudden widening of the Asian turmoil. U.S. lawmakers are demanding reforms as the price for further U.S. contributions.