The global financial crisis had strengthened the case for a united European response to major world problems, the French President Nicolas Sarkozy said, according to the latest press release of the European Parliament, Tuesday. Debating in the European Parliament, Sarkozy who currently holds the six-month rotating Presidency of the EU, said that what had begun as a serious financial crisis had, with the collapse of well-known Wall Street investment banks, become a systemic crisis. Governments were now in crisis management mode to help deal with the worst financial meltdown since the Great Depression.
A key question to be answered was "How to prevent a recurrence?" the French President asked rhetorically. The objective was to reform and overhaul capitalism and not to question the very idea of a market economy, he pointed out. There was an urgent need for a "new global financial system," on the model of the six-decade old Bretton Woods agreement. Yet, the system should be broad based enough to encompass emerging economies like China and India, while accommodating the existing major economies.
Further, the new arrangements should be guided by certain principles, the President said. Banks utilizing state money ought not to work with tax havens, while all financial institutions should be subject to regulations and traders' bonus pay structures must not prompt them to take undue risks. Thus, the entire global monetary system should be clearly and completely rethought. To this end, the US and the EU had proposed a series of meetings, scheduled to take place in November, first among the G8 countries, while the G5 countries would be involved at a later stage. "Europe must speak with one voice," at the meetings Nicolas Sarkozy said.
The financial crisis was beginning to adversely affect the real economy. The burgeoning economic crisis could be best met with a united European response, according to the French President. It must be ensured that "European companies are not bought up by non-European capital while their stock exchange values are low," Nicolas Sarkozy said. The time was now ripe for EU countries to launch their own sovereign wealth funds, he observed. Europe should also develop its own ratings agencies as presently most of the agencies were US-based, he added.
Administration of the eurozone area cannot continue as at present and needed clear economic guidance. The European Central Bank while maintaining its vaunted independence should also be enabled to hold discussions with governments at the head of state/government level on major economic issues, the French President suggested.
In the press of the current financial turmoil it would not do to backtrack on EU's energy and climate package, Sarkozy cautioned. "Europe must set an example," he said, rejecting any idea that the world should do less to combat climate change because of the financial crisis. Flexible solutions should be found for the problems faced by countries heavily dependant on coal.
President Sarkozy's ideas and handling of the crisis were dynamic, while the fact that Europe was working closely with the US in handling the crisis was welcome, according to Jose Manuel Barroso, President of the European Commission. Europe was faced with a serious economic metldown with jobs, incomes and order books affected. Vulnerable sections of the population had to be supported in intelligent ways, he said. "There is no national road out of this crisis, we will sink or swim together. We must not give in to siren calls for protection," he added.
Firm yet informed actions were necessary to prevent any further slide in the economic situation, according to analysts. Sarkozy's observations on markets and regulations were reassuring in this respect. It was anybody's guess where the boundary lines between government and markets would form once the dust settles on the current crisis. But it is to be hoped that it would fall in such a way that individual economic freedoms would be given ample room to continue to create wealth.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.