By David Haggith, Worthy News Correspondent
LONDON, UNITED KINGDOM (Worthy News) -- Europe was seeking a new "global deal" Tuesday, February 24, after British Prime Minister Gordon Brown launched an initiative that includes unprecedented new regulations for financial markets and hedge funds to tame the worst economic crisis in eight decades.
Brown said in Berlin that the world needs "a global New Deal -- a grand bargain between the countries and continents of this world -- so that the world economy can not only recover but... so the banking system can be based on... best principles."
He spoke Sunday, February 22, at a meeting of heads of states and finance ministers of Europe's largest economies, who attempted to formulate a common economic position ahead of the Group of 20 nations summit on April 2 in London.
That appeared music to the ears of German Chancellor Angela Merkel, who hosted the meeting. She later said that everyone agreed that, "All financial markets, products and participants including hedge funds and other private pools of capital which may pose a systematic risk must be subjected to appropriate oversight or regulation."
The plan was supported by all participating top officials from Britain, France, Germany, Italy, Luxembourg, Spain, the Netherlands and the Czech Republic, she added.
French President Nicolas Sarkozy explained to reporters that the world needs to respond with a long term plan. "We're not talking about superficial measures now or transitional measures -- we're talking about structural measures, which need to be taken."
He had been criticized by the Czech Republic, which currently chairs the European Union, for perceived protectionist measures, including suggesting that French car makers will receive massive aid only if they close factories abroad, including in Eastern Europe. Czech and French ministers have meanwhile agreed to hold talks on the issue, Radio Prague reported.
British Prime Minister Brown told the Cable News Network (CNN) last month that world leaders failed to recreate adequate global economic institutions.
"The problem is the institutions we built sixty years ago are out of date," he said, referring to the World Bank and International Monetary Fund, established at the end of World War Two. "We've got to be far bolder and far more imaginative," Brown said, adding that leaders should also use the crisis to establish a "greener, more digital and more highly skilled economy."
Both Brown and Merkel have urged the creation of a new global regulatory agency that will prevent "short term irresponsible risk taking and excess."
British banks have been suffering at least as hard as U.S. banks, and Germany's government is looking into forcibly nationalizing financial institutions, including the bank Hypo Real Estate which already received 102 billion Euros ($130 billion) from the government in loans and loan guarantees.
Germany and other major European economies are also preparing to pay much for bailing out struggling economies of smaller Eastern European states, including Hungary and Latvia.
Experts say Western European economies are under pressure to agree on a global systems that may prevent this kind of fallout to themselves in the future.
Merkel decried "blank spots" in the world today where regulations currently do not apply, and European leaders agreed that part of the transformation will include getting tough on international tax havens.
The United States already filed a lawsuit last week to force United Bank of Switzerland (UBS) disclose the identities of as many as 52,000 U.S. customers who allegedly evaded taxes, barely a day the bank admitted to tax fraud and agreed to pay 780 million dollars in settlement charges.
The European Union has made clear it could take similar steps.
Talks on these and other issues are expected to be high on the agenda at the upcoming Group of 20 nations in London. The G-20 includes the G-7 leading industrialized nations -- Canada, France, Germany, Italy, Japan, the United Kingdom and the United States -- and the world's largest developing economies: Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey, plus the EU.
The leaders of the International Monetary Fund and World Bank are also due to attend the London gathering. (With some reporting by Worthy News' Europe Bureau Chief Stefan J. Bos).