Romanian President Briefs Media On Informal EU Meeting Conclusions

Romanian president Traian Basescu said Friday in Brussels, after the informal reunion of the heads of states and governments, that other crisis outbreaks could occur, in the world, after the USA and the EU, as the size of the financial crisis generated the risk of a global economic crisis.

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Basescu said that on an international level, the financial crisis, through its size, also became an economic crisis.

"It is clear and acknowledged that the size of the financial crisis generated the risk of a global economic crisis. In the following period, there might be other crisis outbreaks as well. For the moment, the crisis has struck the USA and the EU, but there could be other crisis outbreaks as well," the head of state said.

He added that, unfortunately, the financial resources of financial institutions, like the International Monetary Fund, are not sufficient in case of other crisis outbreaks.

Referring to the conclusions of the reunion in Brussels, Basescu said all delegations of attending state said the EU has proven to be responsible, united and capable of coordination in the world financial crisis.

Basescu added one of the reunion’s decisions referred to the raising of the ceiling for EU intervention, from EUR12 billion to EUR25 billion.

The head of state said the informal reunion of Government and state officials in Brussels did not involve written conclusions, only the clarification of directions, the clarification of a mandate for the EU presidency in the G20 Summit, which will be held on November 15, in Washington.

"The mandate was agreed upon, and the general lines of the European view were relatively easy to obtain," Basescu said, adding that "the EU option is to reform the international financial system."

The president also said the Union aims to participate in the Washington reunion on three levels: common action principles for a new international financial system, an agenda of actions and the construction of a new working method that would allow quick decisions.

According to the president, the first of these actions targets regulation and oversight, including all institutions and markets.

The head of state also added the International Monetary Fund will extend its responsibilities in this reform process where the EU becomes a player equal to the USA, which also means currency that can become the officially acknowledged reserve.

Thus, the International Monetary Fund should play monitor in financial activities, while the Financial Stability Fund is to issue regulations and oversee the system, Basescu said, adding that the International Monetary "will improve its governing and financial capacity, which is currently insufficient for crises of this type."

Basescu also said approval would be sought in Washington for five actions, one of them targeting "immediate realities," including the convergence of accounting standards.

Basescu mentioned the introduction into accounting of the term "just value," which would maintain a balance between the accounting value and the market value, which, in his opinion, “is sometimes exaggerated.”

The head of state added another measure targets the regulation, for all financial institutions, of the market segments, as well as the code of conduct for the assumption of excessive risks by bank managers.

On the other hand, Basescu said the financial system currently established by Bretton Woods needs correction, which would take into consideration EU’s power, as well as the emerging markets. The international financial system cannot be frozen in its initial form due to the EU’s economic realities, Basescu mentioned.

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