Global Reforms
October 30, 2008
Both leaders agreed to "strengthen" the Washington-based International Monetary Fund (IMF) with a new facility on which countries threatened by the global crisis -- especially the emerging economies -- could draw.
It was "vital" that further contagion of countries by the current global financial crisis be prevented, especially in eastern Europe, Brown said after the meeting Thursday, Oct. 30, in a reference to recent IMF aid packages for Hungary and Ukraine.
Additional resources for the IMF should be provided by countries with "considerable reserves," said Brown. Earlier this week, he said China and the oil-rich Gulf states should be called upon to provide extra money for the fund to alleviate the current global financial crisis.
He and Merkel would work together to persuade other nations of the need for "comprehensive global action" to contain the crisis, as all major economies were facing the prospect of recession, Brown said.
"This is a global problem that requires a global solution," he said. "No country, no matter how big, can solve these problems on its own."
Merkel agreed, saying, "A global problem can only be solved through cooperation."
Protecting the real economy
Merkel stressed that it was important to learn from the current crisis and to limit its impact on the real economy.
"We will not be able to continue our economic success unless action is taken," the chancellor said. "Without a functioning world economy, we will not be able to safeguard jobs."
The leaders urged their countries' banks to step up lending, following the massive support packages agreed by major European governments earlier this month.
"This is not yet happening to the extent we had wished for," Merkel added.
Brown urged banks to keep lending to small businesses despite the global credit crunch.
He welcomed a commitment Thursday by the European Investment Bank to make 4 billion pounds (5 billion euros, $6.4 billion) available to provide financing to firms in Britain.
"We must continue to encourage banks to lend," Brown said. "Having recapitalized the banks we must ensure that the money is used to sustain credit lines on normal terms to solvent businesses."
The Brown-Merkel meeting was part of a series of bilateral encounters ahead of next week's European Union (EU) special summit on the financial crisis and a meeting of the Group of 20 in Washington on Nov 15.