The leaders of Europe's biggest economies have called on financial institutions to improve transparency in all their activities. UK Prime Minister Gordon Brown met his French, German and Italian counterparts at Downing Street to discuss the recent global market turmoil. The leaders also called on the IMF and other bodies to monitor risks better.
If the finance industry did not address their concerns, they said they would consider imposing regulatory measures. "We need a better early warning system for the global economy" Mr Brown told reporters on Tuesday following the meeting. "We want the prompt and full disclosure of the write-offs that are now to take place as soon as possible; I think these are the immediate things people want to be done," Mr Brown said. Banks have been reporting massive losses related to risky investments in the ailing US housing market. Mr Brown said credit rating agencies, that assess the risks of financial instruments, needed to increase investors' understanding of complex products. Mr Brown met German Chancellor Angela Merkel, French President Nicolas Sarkozy and Italian Prime Minister Romano Prodi. "We want the kind of capitalism that promotes entrepreneurship not speculation," said Mr Sarkozy afterwards. "We can't let this lack of transparency jeopardize growth." European Commission President Jose Manuel Barroso also attended the discussion. The leaders said in a statement that if financial institutions did not rapidly address their concerns, they were ready to introduce rules and regulations as an alternative to "market-led solutions". Ms Merkel said that the lack of openness about the activities of some financial institutions had eroded trust and could lead to a rise in protectionism. "We need to have more transparency on the valuation of these new, very complex financial instruments," said Ms Merkel. Earlier on Tuesday, Chancellor Alistair Darling told BBC News that cooperation was key to preventing an economic slowdown intensifying. "With the combination of the right regulatory response and the right economic response, I am confident that we will get through these difficulties and will continue to see growth." Consumer confidence is deteriorating across Europe as stock markets plummet and the Societe Generale rogue trader scandal makes headlines. And the US economy, a major destination for European exports, could be headed for a recession, some economists say. The talks come before finance chiefs from G8 nations meet in Japan in February.