Europeans cheer G20 summit and eye implementation

By Noah Barkin - Analysis

BERLIN (Reuters) - European leaders left this weekend's Washington summit pleased with the chunky communique it produced, but implementing the ambitious action plan to fix the world financial system presents significant challenges.

The summit statement from the G20, a grouping of major industrialised and developing countries, contains the kind of reform pledges and language that European critics of "Anglo-Saxon"-style capitalism have sought for years.

It states that all financial markets, products and participants will be subject to supervision in the future, vows tougher accounting rules, a review of compensation practices and enhanced cooperation between national regulators.

The communique incorporates many ideas pushed by the Europeans in recent weeks, from boosting the role of the Financial Stability Forum, a body that evaluates bank and market risk, to setting up "colleges" of supervisors for major banks.

"The big ideas are all of European origin," said Richard Baldwin, a Geneva-based economics professor and policy director of the Centre for Economic Policy Research (CEPR).

"The summit took some sensible steps, but many of the specifics still need to be worked out. This is the start of a process and the tough work lies ahead."

Members of the German and French delegations said they were highly pleased with the summit and surprised not to have encountered more resistance from Washington.

One German official told Reuters it had taken government finance experts only two hours of negotiations on Friday night to finalise the text and that G20 leaders made only cosmetic changes thereafter.