European Heads of State and Government held, on November 7th, an informal meeting to consult on the negotiating position of the European Union at the G20 summit. The international summit, to be held in Washington on November, 15th, 2008 must pave the way for the reform of the international financial system.

The European strategy sets the framework to overcome the financial crisis, and proposes creating the corpus of a new international financial architecture, aiming to ensure global financial stability. Europe must play a major part in it in three respects: common principles upon which to build a new international financial system, a working method to deliver real decisions swiftly, a full set of responses, some of which should be adopted without delay.

The unity of the European Union must also be reflected in effective consultation on each Member State's economic policy response to the present situation. The work carried out over the last few weeks in together establishing a set of principles and a  list of possible solutions in the financial sphere can serve as a model for improving economic consultation.

The Heads of State and Government meeting at the last ECOFIN Council had the opportunity to debate the common messages to be transmitted at the Washington Summit. Since the beginning of the crisis, the European Union has stressed the need to tackle the situation with a joint EU action, reflecting this unity in effective consultation on  each Member State's economic policy response to the present situation.

The European strategy should be articulated around a set of common principles:

• No financial institution, no market segment and no jurisdiction must escape proportionate and adequate regulation or at least oversight.
• The new international financial system must be based on principles of accountability and transparency.
• The new international financial system must allow risks to be assessed so as to prevent crises.
• Give the IMF a central role in a more efficient financial architecture.

Thus, it is proposed to establish a compensation policy for financial institutions to avoid excessive risk-taking and an early warning system to identify potential crises.

According to the European leaders summit in Washington must be an opportunity to integrate the reform of the international financial system in all the challenges of the twenty-first century for the future: food security, fight against poverty and climate change.