G20 and new US administration critical for leadership on finance reform

"One clear message from our discussions here for the G20 is that governments must in no sense lift their guards at this point," said Howard Davies, Director, London School of Economics and Political Science, United Kingdom, and a former Chairman of the UK's Financial Services Authority. "The forthcoming summit should identify the directions for change," he added.

"Governments must also be careful not to overreact." There needs to be greater accountability in the international financial system, Davis argued. "There isn't anybody clearly in charge." Major emerging economies should have a stronger voice in the discussions over reform, he concluded. The new US administration will have to work closely with the G20, Soud Ba'alawy, Executive Chairman, Dubai Group, United Arab Emirates, agreed.

"The election of Senator [Barack] Obama provides a unique opportunity for leadership both domestically and internationally," reckoned Mohamed A. El-Erian, Managing Director, Co-Chief Executive Officer and Co-Chief Information Officer, Pacific Investment Management Company, USA. "You need change and you have a very critical agent of change in the President Elect." "What [President Elect Obama] needs to do is put in place his Treasury team," said Davies. "This is a huge opportunity and responsibility on the shoulders of the new administration."

The crisis, however, offers a critical chance for the world to restructure the international financial system, the experts. "Problems are the parents of solutions," said Suzanne Nora Johnson, Senior Director, Goldman Sachs, USA, and a Trustee of the Carnegie Institution of Washington. "This gives us great opportunities to find solutions and new ways of looking at the world." Johnson added that, while there had been protectionist reaction in the US to sovereign wealth fund investments, as a result of the liquidity crisis there would now be greater openness to such deals. "Protectionism is natural," Ba'alawy noted. "Nothing will change. But there will be times like this when sovereign wealth funds will be welcomed big time."

The World Economic Forum, in partnership with the Government of Dubai, opened the inaugural Summit on the Global Agenda in Dubai yesterday. The Summit is a unique and timely gathering of the world's 700 most innovative and relevant minds - leaders from academia, business, government and civil society from around the world. Organized by the Forum's Network of Global Agenda Councils, the Summit provides a platform to share ideas and collaboratively address some of the key issues on the global agenda - with the aim of laying out solutions to some of the most pressing issues.