One day after the G20 leaders came up with a plan to save the financial world was the reaction is one of cautious optimism.
Despite the generally positive tone some economists pointed out the world’s banks are still stuck with trillions in loans on unsaleable and over-valued assets. But as they met in Prague European Union finance ministers hailed the G20 decisions as ambitious. Peer Steinbrück, the German Finance Minister, said: “When you compare the situation of yesterday, for example, with the beginning of 2007, half a year before the financial turmoil started, I think we made great progress.” The G20 decision to tighten rules on tax havens was also discussed in Prague after the Organisation for Economic Cooperation and Development published a list of countries that have committed to international tax reporting norms but not yet fully implemented them. Luxembourg’s Prime Minister Jean-Claude Juncker said: “I’ve taken note of this list, and I noted, as did my Austrian and Belgian colleagues that we appear in it. It describes what we have done and what we are doing, but not what we’ve not yet been able to implement.” The countries on that OECD list, including Liechtenstein and Switzerland, were critical of the way it was drawn up. Juncker said if Luxembourg were placed on any international list of offshore financial centres then several US states with tax-friendly laws – Delaware, Nevada and Wyoming – should be on it. Share were initially boosted by the G20 moves, but the effect did not last long and trader Oliver Roth said: “The decisions that were made at the G20 summit in London were good, but not really enough. The markets were moved by optimism, but the recession is probably not going to be over by the end of the year. And so more measures will be needed.” For investors it is wait and see whether this is as European Central Bank President Jean-Claude Trichet said: “Everything we need to restore confidence.”