OECD calls for "mother of all firewalls" against financial crisis

Feb 25, 2012, 16:43 GMT

Mexico City - Jose Angel Gurria, secretary-general of the Organization for Economic Cooperation and Development (OECD), called Saturday in Mexico City for an increased firewall as part of a massive financial anti-crisis mechanism.

'We still have to build the mother of all firewalls,' Gurria warned. 'It's six months late, a year late.'

Gurria was addressing the Institute of International Finance (IIF), which brings together 450 banks, insurance companies and other providers of financial services, whilst also on Saturday in Mexico City, the finance ministers and central bankers of countries belonging to the Group of 20 (G20) were meeting behind closed doors.

'The thicker the firewall, the less likely it is we will have to use it,' he said.

Gurria, a Mexican, stressed that the cost of indecision 'is enormous,' but that a political decision is necessary to implement such a firewall.

In comments to reporters after his address, he said that there was no 'magic number' but estimated at around 1.5 trillion dollars the figure required to restore confidence between European firewalls and contingency funds at the International Monetary Fund (IMF).

Debate on anti-crisis financial mechanisms is believed to be a central part of G20 meetings Saturday and Sunday in Mexico City.

The IMF has been asked to increase its contingency funds to reach 600 billion dollars, but key countries including the United States are reluctant to allow that.

Germany is another of the countries that think no extra firewall funds are needed and advocate deeper restructuring instead.

'Higher walls can buy time, but time must be used to tackle the roots of the crisis,' Bundesbank President Jens Weidmann told the IIF Friday.

'This includes consolidation of public finances, structural reforms and better rules at the European level,' he said.

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