LONDON (AFP) — World leaders must meet to agree a new Bretton Woods system, Prime Minister Gordon Brown said on Monday, referring to the global financial architecture established at the end of World War II.
Speaking as the government announced its latest move to try to stabilise the creaking banking system, Brown said the current crisis should be seen as an opportunity to push through delayed reforms.
"Sometimes it takes a crisis for people to agree that what is obvious and should have been done years ago, can no longer be postponed," he said in a major speech on the fast-moving world financial crisis.
"We must create a new international financial architecture for the global age," adding: "We must have a new Bretton Woods -- building a new international financial architecture for the years ahead."
The Bretton Woods system was agreed at the end of World War II. It set in place the world's financial architecture, which remains in place today, based on the International Monetary Fund (IMF) and the World Bank.
Brown said: "While the founders of Bretton Woods devised rules for a world of limited capital flows, we must devise new rules for a world of global capital flows."
What was needed, Brown said, was a financial system for the 21st century that recognises "the new realities -- open not sheltered economies, international not national capital markets, global not local competition".
"It must be one that captures the full benefits of global markets and capital flows, minimises the risk of disruption, maximises opportunity for all and lifts up the most vulnerable, in short, the restoration in the international economy of public purpose and high ideals."
Brown compared the task facing world leaders now with the actions of British Prime Minister Winston Churchill and US President Franklin D. Roosevelt during World War II.
Even in the "heat of battle," they "were already thinking about the framework that would be needed for the future," Brown said.
The prime minister said international cooperation was the only way the global economy could achieve the re-structuring it needed to avoid a repetition of the problems seen over the past 12 months.
The current global system was "too clouded with opacity, conflicts of interest, irresponsible risk-taking, and when problems occur countries have tended to look inwards and deal with them in isolation when it is clear they should look outwards and join in international co-operation."
Brown said he had proposed a reform of Bretton Woods in a speech at Harvard University a year ago, but other factors such as the rising oil price "got in the way" of anyone acting on his call.
He said he would now re-double his efforts to secure a meeting of world leaders as soon as possible to discuss drawing up a new Bretton Woods system.
His comments came as European governments launched a multi-pronged attack on the financial crisis, buying into banks and approving hundreds of billions of dollars in loans in a move to stabilise panic-stricken markets.
Britain announced it was ploughing 37 billion pounds into a trio of struggling banks, as part of a 500-billion-pound package of measures announced last week.
He noted that European Union (EU) leaders will discuss the crisis at a regular summit in Brussels Wednesday and Thursday.
"We are proposing a world leaders' meeting in which we must agree the principles and policies for restructuring the financial system across the globe," he added.
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