QUEBEC CITY (Reuters) - French Prime Minister Francois Fillon, addressing his country’s vision for reforming the troubled world financial system, called on Sunday for uniform rules that apply everywhere including in tax havens.
Fillon sought to flesh out French President Nicolas Sarkozy’s call for a revamping or “refoundation” of capitalism, citing discrepancies in regulation around the world that can lead to the sort of turbulence now afflicting markets.
A Canadian government minister said on Saturday that Canada would not go as far as France in urging a rethink of capitalism, but Canadian Prime Minister Stephen Harper did concur with France on Sunday that more was needed than country-specific reform measures.
“I do not believe that national regulation alone is sufficient,” Harper told a news conference at the end of a summit of French-speaking nations.
He said the world must continue to take immediate steps to stabilize markets and prevent the collapse of banking systems but must also address the long-term need for more effective international financial institutions.
Fillon, addressing the same news conference, tried to correct what he thought was a misunderstanding of France’s position. France has led the push for international summits to confront the market turmoil.
“Nobody wants extra rules. Nobody wants protectionism. What we want is simply a regulation of the financial system that is coherent and consistent in all parts of the globe,” Fillon said.
“Today there are financial institutions that escape regulation. Certain banks aren’t regulated at all. Today there are tax havens that avoid all rules. Today there are prudential rules that aren’t the same from one country to another, from one continent to another. And that creates imbalances and competitive distortions.”
REVAMPING THE SYSTEM
Fillon also used the term “refoundation” or revamping of the international financial system, and said it was designed to prevent a repeat.
“We don’t want those who have led the international financial system to where we are today to be able to start again tomorrow and do exactly the same thing because we haven’t made the decisions needed to make the system more effective and fair,” he said.
Harper, an economist by training and Canada’s Conservative leader, leans instinctively against too large a role for governments.
“We have an international market system in which there are problems, but we don’t want to eliminate this system (as a whole),” he said.
But he agreed with France, at least in saying clear action was needed at an international level, and criticized a situation whereby taxpayers end up taking on corporate losses.
“In certain countries -- not in Canada -- profits are private but losses are public. It’s not acceptable to run a system like that,” Harper said.
Canada’s banking system remains solid so far, he said, but the authorities were examining whether further steps were needed to improve it.
“Governments must collaborate to address the present crisis and continue to stabilize markets and to assure the availability of credit between banks at the international level,” he said.
“At the same time, we have to reform institutions and regulations around the world to make sure we avoid such a crisis in the future. This situation exposed structural weaknesses in the market system and in the institutions that are responsible for managing such a crisis.”
Editing by Chris Wilson
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