Norway says supports Brown regulatory initiative

OSLO (Reuters) - Norwegian Prime Minister Jens Stoltenberg said on Tuesday Norway was strongly in favour of Prime Minister Gordon Brown's initiative for dealing with the international financial crisis.

Brown has called for a new Bretton Woods agreement to make the global financial system fit and said he would take his plan for reform to a meeting of the European Council on Wednesday.

"I have spoken with Gordon Brown today, and Norway strongly supports the initiative that Great Britain has taken," Stoltenberg told a foreign policy seminar.

Stoltenberg, who is also leader of the Labour Party, said two lessons could be drawn from the financial crisis: that markets do not regulate themselves but must be directed and that better international rules are needed.

"We must have a stronger global regulatory framework to regulate the international financial markets," he said in a statement.

He said he welcomed the measures that countries have now put in place to deal with the crisis.

On Sunday Stoltenberg's government unveiled new measures to bolster the liquidity of Norwegian banks, saying it would offer up to 350 billion crowns (32.46 billion pounds) in government bonds that could be swapped for other bonds held by banks.

By exchanging high-rated government securities for mortgage-backed bonds, the measure is meant to give banks solid securities that they can use as collateral in funding themselves in the money markets.

Analysts have said the measure will effectively shift some of the risk to the government.