Nov 7, 2009, 13:54 GMT
St Andrews, Scotland - British Prime Minister Gordon Brown urged finance ministers from the world's 20 leading economies meeting Saturday to consider imposing a tax on financial transactions to help head off future global economic crises.
'It cannot be acceptable that the benefits of success in this sector are reaped by the few, but the costs of its failure are borne by all of us,' Brown told a meeting of the Group of 20 finance ministers and central bankers in the Scottish golf resort of St Andrews.
He comments drew the spotlight away from the other items on the meeting's agenda, including moves to bolster the tentative recovery underway in the world economy and climate change.
But the British leader told the G20 financial officials that a new social contract was needed between the public and the banks, which have come under fire for their role in helping to trigger the financial crisis that engulfed the world economy since 2007.
'There have been proposals for an insurance fee to reflect systemic risk or a resolution fund or contingent capital arrangements or a global transaction levy,' said Brown who faces a tough national election next year.
But he insisted that, to be effective, such a tax would have to be introduced on a worldwide basis.
'I do not in any way underestimate the enormous and difficult practical and technical issues that will need to be overcome that a globally cohesive system requires and raises,' he said.
'But I do not think these issues should prevent us from considering with urgency the legitimate issues I have discussed,' he said.
Coming in the buildup to the Copenhagen global climate summit in December, the G20 meeting in St Andrews has also been used to consider steps for financing measures to help emerging economies to tackle climate change.
It also comes just one day after talks in the Spanish city of Barcelona aimed at paving the way for next month's climate change summit ended without agreement on a series of contentious issues.
Opening the summit, Britain's Chancellor of the Exchequer Alistair Darling said it was imperative to make real progress on the question of climate change.
'It really is important that we as finance ministers are engaged in this, because if there isn't an agreement on finance ... then the Copenhagen agreement is going to be much, much more difficult,' he said.
The St Andrews' meeting represents the third time that the G20 finance ministers have met this year, following a summit of the group's leaders in September.
At their September meeting in the US town of Pittsburgh, the G20 leaders agreed that the bloc of advanced and emerging countries will permanently replace the long-standing Group of Seven as the main body to discuss economic issues.
Together, the G20 member states represent about 85 per cent of global economic activity.
Moreover, since the G20 met earlier this year, signs have emerged that the world economy is starting to shake off what has been the deepest recession in about six decades.
This has meant that the G20's focus has started to shift from moves to contain the global economic crisis to steps that consider how to shore up the so far fragile recovery.
Germany, France, the United States and Japan, which have already emerged from recession, are keen to start discussing moves to wind back the massive stimulus plans they rolled out to counter the downturn, but which have resulted in rising public debt levels.
However, nations such as Britain, which is hosting the meeting and is still stuck in recession, are reluctant to begin considering a timetable for withdrawing the anti-crisis stimulus packages.
That said, the ministers and their central bank chiefs appear to agree that a sustainable recovery has still not taken shape and that the stimulus measures need to remain in place for the time being.
In addition, to the world's leading developed nations such as the US, Germany, Japan, Canada and France, the G20 includes key emerging economies such as Argentina, Brazil, India, Indonesia, Mexico, Russia and China.
Meanwhile, there were clashes outside the G20 summit venue between police and demonstrators who have called for the creation of a 'people's G20.'
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