[...] to give more economic oversight power to the International Monetary Fund, and more financial oversight to an institution that would derive from the Financial Stability Forum, a group that brings together senior representatives of national financial authorities, regulators, central banks and international financial institutions.

The French leader is pushing for the G-20 to endorse accounting rules that reduce boom and bust economic cycles, and to regulate hedge funds and rating agencies. He’s calling for rules that would force banks to disclose traders pay to regulators, which could in turn ask financial institutions to increase reserves if their compensation system encourages risk taking.

The French do seem to be taking a confrontational line to get international actors to work together. This might possibly just be a display from Sarkozy’s side to show his domestic audience that he is taking action, without having to dig too deep into France’s own coffers. His moral-religious rhetoric seems to support this theory.

We underscore the critical importance of rejecting protectionism and not turning inward in times of financial uncertainty. In this regard, within the next 12 months, we will refrain from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing World Trade Organization (WTO) inconsistent measures to stimulate exports.

The report states that the developed economies resort to subsidizing of export industries, while the developing use a number of different measures, among them imposing tariffs. According to the World Bank, this is testimony of the superior financial strength of the developed economies. The generated deficits might however increase pressure to “wall off” the economy, by which I assume they mean increasing trade tariffs.

When the rich countries of the world resort to direct subsidies for business, as is the case with the American car industry subsidies, the poorer countries should have reason to fear. Neither rich nor poor countries can afford to stop trading, but the fact that the richer countries have access to subsidies and the poor countries must wall off trade might prove very bad news for the poorer countries in the long run.

Find the rather short and easily read report here:

http://siteresources.worldbank.org/NEWS/Resources/Trade_Note_37.pdf