EXTRACT from Gordon Brown's speech to G20 Finance Ministers - Saturday 7 November 2009

[Speaking about the financial sector]

...And it cannot be acceptable that the benefits of success in this sector are reaped by the few but the costs of its failure are borne by all of us.

There must be a better economic and social contract between financial institutions and the public based on trust and a just distribution of risks and rewards.

It cannot be successfully achieved other than at a global level.

Clearly capital and other regulatory requirements - the provisions needed to protect the public, as we have, from a high risk of failure- need to be internationally agreed.

Public protection from failure must also come from globally agreed requirements for what are called living wills - the acceptance by financial institutions of their responsibility to order their business in a way that contains the costs of failure.

But what we need to consider is whether in fact we need to go further in recognising the social and economic responsibility of the financial system not least in mitigating the risks to the rest of society.

In the UK we are legislating for a reformed financial services compensation scheme.

But this only covers retail deposits and not the systemic risks to the economy that come from the wholesale markets and other systemically important financial institutions, and the costs of intervention that sometimes cannot be avoided.

That cannot be achieved by a national approach - only with a global approach.

So I believe we should discuss whether we need a better economic and social contract to reflect the global responsibilities of financial institutions to society.

There have been proposals for an insurance fee to reflect systemic risk or a resolution fund or contingent capital arrangements or a global financial transactions levy.

Any measures we consider would have to be set against four core principles.

First, they would have to be global: to reflect the existence of the world's first truly global sector and thereby create a level playing field for its operation.

They would need to be implemented by all responsible financial centres in the world - the US, Europe, Asia, the Middle East and Switzerland. Let me be clear: Britain will not move unless others move with us together.

Second, they would have to be non-distortionary to avoid damaging reductions in liquidity, inefficient allocation of capital and the temptation of avoidance.

Third, any measures should complement - and reinforce - the action we are already taking to enhance the stability of the international financial system and the global economy.

Fourth the contribution we ask the global financial services sector to make must be fair, measured and enable financial services to make their necessary contribution to future economic growth.

I do not in any way underestimate the enormous and difficult practical and technical issues that will need to be overcome that a globally cohesive system raises. But I do not think these difficulties should prevent us from considering with urgency the legitimate issues I have discussed. I thank Dominic Strauss Kahn for responding to our request for agreeing to review these issues and look forward to the IMF report in April. And I would like the leaders of the global financial sector to engage in a constructive dialogue to achieve a better outcome for us all.

When we look at what we are doing overall, the task this generation is having to set ourselves in advancing stability, growth, development and climate change is daunting. It is nothing less than building the new responsible global economy and society of the future.

In the last fifty years global change people thought impossible and unworkable has happened.

This weekend we celebrate the twentieth anniversary of the fall of the erlin Wall.

In a few months time we celebrate twenty years since the release of Nelson Mandela and the end of apartheid.

Almost 10 years ago the world agreed development goals which have helped 40 million children into school and five years ago we agreed debt relief for the poorest countries.

We have proved that by common resolve and action, what people think is insurmountable today can become a reality tomorrow even when it at first seems beyond our grasp.

In a month's time the world convenes in Copenhagen to try to forge a new international agreement on climate change.

It is a historic moment: a test of global co-operation every bit as significant as the economic tests we have faced together this year.

It is essential that we urgently move toward resolving the issues that still divide our nations.

I have no illusion about the scale of the challenges we still face.

But your meeting today is evidence that we are moving beyond the fragmentation of the past to achieve our common goals.

Those goals are ambitious but they are necessary.

I believe in a strong global financial sector.

I believe in an open and inclusive globalisation.

But I believe that the global economy and global society will only thrive if it is brought within a rational and fair framework which today we are charged with bringing to life.