Cause and Effect in European Politics and Law

There's no need of a stress test for the banking system, according to the G8 finance ministers

Adelina Marini, June 15, 2009

There was a very serious division among the ministers of finance of the G8 who met on Saturday in the Italian town of Lecce. The reason for the division was the question whether the results from possible stress tests on the banking system should be made public or not. At the end of the day the ministers decided not to include a text on the matter in their final statement. Germany and France insisted the results to be made public but this was not supported by the others. The ministers have also expressed cautious hope that the global financial crisis might be over and have started for the first time to discuss "exit strategies" to fight the growing threat of inflation.

Beside the light dose of optimism, the G8 financial ministers had for the first time to discuss measures against the unsustainable levels of public debt and the budget deficits. Unemployment has also been pointed out as the main problems from now on, which need urgent attention. The ministers of Canada, France, Germany, Italy, Japan, Russia, UK and the USA have asked the IMF to start preparing analyses on possible "exit strategies", says the final statement of the meeting.

The ministers have also united around the opinion that the danger of sharp rise of inflation might be due to speculation, especially regarding the rising price of oil. According to the Italian minister of finance, who hosted the meeting, Giulio Tremonti, "instead of financing the real economy, the extra liquidity in the system has the tendency to fuel speculation". Mr. Tremonti is one of the staunchest skeptics of the efficacy of fiscal stimulus packages.

But the ministers refused to announce officially their a little bit more optimistic mood in comparison to the atmosphere at the London G20 summit in April, with the main argument that everyone is no on terra incognita. The ministers have also agreed to develop the Lecce Framework - a set of common principles and standards, regarding the conduct of international business and finance – which builds on existing initiatives. Nevertheless the changes in the regulation schemes remain prerogatives of national policy, is what the statement says.