Latest news and analysis
G7 Finance Ministers meet to prepare G20 summit
The G7 Finance Ministers and Central Bank Governors have met in Rome on February 14. As the meeting was mainly to prepare the G20 summit in London in April and to meet new US Treasury Secretary Timothy Geithner, very little has been agreed on.
The G7 stressed their commitment to free trade, as well as their will “to cooperate to avoid undesirable spillovers and distortions” but did not specify what that includes. It committed to deliver a progress report in four months on developing a set of common principles and standards on “propriety, integrity and transparency of international economic and financial activity”.
Regarding development, the G7 “stresse[d] the need to support emerging and developing countries’ access to credit and trade financing and resume private capital flows” and said it is “committed to explore urgently ways, including through multilateral development banks, to enhance this support”. Subsequently, it welcomed the additional provision of finance to emerging and developing countries by the World Bank and regional Development Banks. Besides, it agreed that the IMF needs to be reformed and backed with additional resources” – again not spelling out what specific reforms they can actually agree on.
G20 working groups on IMF and World Bank reform and financial regulation
Details are beginning to emerge on the four working groups formed to report to the G20 on issues of financial regulation, IMF and World Bank reform. Each group is co-chaired by one representative from an emerging economy and one from an industrialised economy. The Working Groups will report to Finance Ministers and Central Bank Governors when they meet on 14th March in the UK.
South Africa and Australia will head the group on IMF reform. Indonesia and France will chair the group on World Bank and multilateral development bank reform. A group focusing on regulation and transparency will be lead by India and China whilst Mexico and Germany are in charge of a group investigating international cooperation in regulation and oversight of financial markets.
UN commission on reform of international architecture holds first meeting
The UN commission of experts on reforms of the international monetary and financial system, headed by Joseph Stiglitz, held its first meeting on January 4-6 in New York. The commission has since published 11 recommendations for immediate action, stressing the need for an “unprecedented global response” towards reforms that will lead to “the better functioning of the world economic system for mankind´s global good”. The next plenary meeting is scheduled to take place in Geneva on March 8-10.
Next G20 meeting slated for London, 2 April
The group of G20 nations will hold its next summit in London on 2 April 2009 (see Update 63). The leaders intend to discuss further policies to ease the global economic crisis and tackle “major questions of economic action”
Latest activities at the international level
Over the summer of 2008 pressure was already building in official circles for a new Bretton Woods-style international conference to restructure the international financial architecture. Since then, there has been the UN’s Financing for Development conference in Doha (28th November to 2nd December) and the first G20 meeting on the issue (See Update 63). These events mark the start of what some are calling the greatest opportunity since 1944 to redesign the international financial architecture. For an analysis on the processes of reform read our most recent article ‘International financial architecture: cleaning up the mess?’
Washington diverges from New York?
The 15 November G20 meeting took place in Washington, spurning the offer from the UN general secretary to hold the conference at UN headquarters in New York. Only the G8 plus some emerging markets (like Brazil, India, China, Argentina, Turkey, South Africa, and Indonesia) and other rich OECD countries (like Australia and South Korea), as well as Saudi Arabia were invited. The G8 statement which called for “key leaders” to be invited, made it clear that it was not a truly international summit.
At the same time, the president of the UN General Assembly, Miguel D’Escoto, set up a high-level task force to review the global financial system, including major bodies such as the World Bank and the International Monetary Fund (IMF). He has appointed Joseph Stiglitz to chair the panel, which will also suggest steps to be taken by UN members “to secure a more stable global economic order”.
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