German Chancellor Angela Merkel and British Prime Minister Gordon Brown argued today for tougher control of the international economy, opening up a potential split with the US on ending the financial crisis.
Merkel said a UN economic council based on the UN Security Council may have to be created to police the global economy, while Brown said his 'shared revolution' would strengthen international institutions.
Both proposals went counter to US ideas rejecting any global enforcer. At a Group of 20 summit in November, Washington fought for national regulators to take precedence.
Brown and Merkel set out the case for greater international control at the World Economic Forum in Davos, both looking forward to a new G20 summit on the crisis to be held in London in April.
The British prime minister, his concentration broken by his own mobile phone ringing during a press conference, called for 'a shared revolution in common action to deal with real problems'.
He said leaders had been calling for the past decade for 'a global financial institution with proper supervision, with proper accountability and a proper early warning system'.
Brown said any changes had to be ready 'as a matter of urgency'.
Merkel said the G20 - which groups the industrialised powers and emerging giants Brazil, China, India and Russia - could eventually agree a global economic charter to enforce new standards when the world comes out of the financial crisis.
Merkel said governments must take firmer control of markets and used her speech to again criticise US subsidies to ailing American car firms which she called a form of 'protectionism'.
The German chancellor said international leaders must make a commitment to free market forces while ending the market excesses and 'irresponsible deeds' that caused the crisis.
HSBC calls for cut in banker salaries
The head of banking giant HSBC said today at the World Economic Forum in Davos that salaries in the industry will have to change but banks must not be 'demonised' over the financial crisis.
US President Barack Obama's attack on 'shameful bonuses' given by banks despite the economic turmoil has put new pressure on finance industry chiefs who have acknowledged growing political and public anger over wages.
Stephen Green, group chairman of HSBC, Europe's biggest bank, acknowledged the excesses of what he called 'the go-go years' at a press conference at the World Economic Forum.
'Banks have clearly done things wrong. Some of the practices did not contribute, by any reasonable standards, to human welfare,' he said.
He said the new market would inevitably change salaries but he defended the paying of bonuses.
'We won't arrive at a situation where there are no bonuses,' he said. ''I think bonuses are a reasonable part of compensation as long as they are reasonable in their overall magnitude and, importantly, reasonably structured.'
He predicted that financial regulators would be taking a close look at salaries and could take action against banks deemed to be taking risks by paying inflated wages.
Green, one of the few top bank executives to brave criticism at the Davos forum, said there was a lack of trust and that the income discrepancy between highly paid executives and the average worker had played a role.
'It has played a part, and I think that to some extent the market's going to take care of this because you are going to see a pulling back of some of the more excessive practices,' he said.
Meanwhile, Taoiseach Brian Cowen said that while in Davos, he is talking to people who are investing in Ireland, including 14 existing companies who employ 15,000 people here.
He said that IDA Ireland were targetting another 14 companies and despite the difficulties of the last year, over 130 new industries were brought to Ireland.
'We want to keep that foreign direct investment up. Yes, there are difficulties but we have a strong balance sheet in business terms. The profit and loss account is weak in coming quarters but we will make whatever adjustments are necessary,' the Taoiseach said.
'It's a question of showing that Ireland is very anxious in continuing on a very successful path while dealing with the very serious difficulties we have to contend with,' he concluded.
