Last Updated Oct 13, 2008 1:31 PM EDT
Government leaders should take advantage of the current financial market chaos to create a new monetary framework that better fits the globalised economy, says UK PM Gordon Brown.
"We must create a new financial architecture for the global age," says Brown, whose government looks set to throw a lifeline of Â£37bn to Royal Bank of Scotland and HBOS-Lloyds TSB.
Brown claims the current financial management system (something called Bretton Woods, after the 1944 meeting at which was created) encourages countries to act in isolation and has the potential to fuel conflicts of interest. It needs to be adapted to fit the "new realities" of internationally competitive markets.
"It must be one that captures the full benefits of global markets and capital flows, minimises the risk of disruption, maximises opportunity for all and lifts up the most vulnerable, in short, the restoration in the international economy of public purpose and high ideals."
But what if the "new realities" represent a reaction against global economic interdependence? With the IMF's over-arching influence notably absent, it's possible we'll see more of the 'every nation for itself' behaviour witnessed last week in Germany, Ireland and between Britain and Iceland. (Today, Britain's stumped up Â£100m for Iceland's Landsbanki, though -- necessity does wonders for co-operation.)
There are already those ringing the death knell for laissez-faire -- how well does state intervention combine with the sort of cross-border collaboration needed to achieve Brown's ideal?
I guess we'll find out. Brown is pushing for a meeting of EU leaders later this week to revisit the Bretton Woods agreement -- and the idea's supported by French president and EU president Nicholas Sarkozy and ex-IMF head and German president Horst Koehler.
While Europe's leaders contemplate re-shaping the global financial system, banks should start thinking about how they will resurrect their ailing image. RBS has already waved goodbye to its CEO, Sir Fred Goodwin. How many more senior scalps will follow?