The good news is that the G20 summit seems to have been more forceful in addressing the impending risks to the international economy than last minute expectations implied. A dubitative form is necessary, however, because the signs from Los Cabos are uncertain and partly contradictory and also because a lot will depend on follow-ups. The central message in the final statement, “Euro Area members of the G20 will take all necessary policy measures to safeguard the integrity and stability of the area” would in itself be quite significant if it could be taken literally. Good part of the summit and a host of meetings and contacts on the side were centred on Europe’s contingencies and how to deal with them.… Read more
Bruegel blog
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Some light in the fog
20th June 2012
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The G20 should rise to the challenge (but probably won’t)
12th June 2012
Everybody knows the euro area is at a critical juncture. A financial reform program is being prepared and should be on the table of the European Council on June 28-29. If things go well (read: if financial markets are reassured that Europe will eventually sort out its financial mess) this should not only redefine the institutional landscape of the zone for many years, but also lift some of the uncertainty overshadowing the global economy. Not by coincidence, President Obama has issued urgent calls for action to Europeans leaders, followed shortly after by the British Chancellor of the Exchequer and by the IMF Managing Director. The decision by Spain to seek EU financial assistance increases the urgency of reform, because it… Read more
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UE: Vent'anni dopo ma con un finale diverso
11th June 2012
Torna lo spettro del 1992: non quello, che alcuni pure paventano, del terrorismo e dell’instabilità politica, ma quello della tempesta monetaria. A chi li ha vissuti gli eventi degli ultimi mesi ricordano in modo impressionante quell’estate di vent’anni fa che precedette la drammatica svalutazione della lira e di altre valute europee. La storia si ripete in forme diverse, questo lo sappiamo; ma che cosa c’è di vero e cosa di ingannevole in questa analogia? Come allora l’Europa è divisa in due, con paesi “periferici” – collocati sempre a sud, salvo poche eccezioni anglofone – che perdono competitività e accumulano, chi più chi meno, deficit nei confronti degli altri. Se la parità monetaria non si aggiusta, le banche centrali devono colmare… Read more
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Reflections after the G20 meeting in Mexico
29th February 2012
In diplomatic language there is a difference between saying “event B cannot happen because condition A is not fulfilled” and saying “event B will happen if – or even as soon as – condition A is fulfilled”. This distinction helps understand what happened last weekend in the G20 ministerial meeting in Mexico City. A few hours ahead of the meeting, an agreement on a replenishment of IMF resources of the size asked by Managing Director Christine Lagarde (a “global firewall”), was a non-starter. The US, followed by almost everybody not located between the Atlantic and the Urals, opposed the move arguing that Europe should mobilize its resources first – in the implicit assumption that new IMF money would be used,… Read more
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The turn of emerging countries
24th February 2012
The distinguishing trait of the G20 is the inclusion of the emerging economies (EME) alongside with the advanced ones. The main industrial countries have long had their proprietary policy forum: the G7. On the contrary, until the launch of the G20 summit in November 2008, the group of EME, that together with the developing bloc represent 85 percent of the people on earth and produce half of global output (a share that is rising quickly), did not enjoy this privilege. True, they are members of the IMF and the World Bank; but their influence on 19th Street still does not match their actual economic weight, let alone the prospective one. Their presence is substantial in the development banks; but these… Read more
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The G20 is urgently needed
2nd November 2011
In August, as the euro crisis worsened and its focus shifted on Spain and Italy, the G20 issued a statement committing to take “all necessary initiatives in a coordinated way to … ensure financial stability and liquidity in financial markets”. Since then, two things have happened. First, sovereign risks have increased, lacking decisive action by some governments and a convincing European response. Second, such response in the end came about, on October 26, in the form of a convoluted but substantive agreement by the euro Summit on all three crucial fronts – Greece, banks and the rescue fund. Can the G20 leaders convening in Cannes assume that those globally coordinated initiatives have become unnecessary? Hardly. Not only because many details… Read more
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Back into action
25th August 2011
In a way few predicted only weeks ago, reality is knocking at the G20’s door: the European debt crisis has taken a turn that threatens the global economy. The plans for the next meeting of heads of state or government, convened for November 3 and 4 at Cannes, need rethinking. Still today, the G20’s agenda focuses on the “old” priorities, dictated by the 2008 US-centred banking crisis and the resulting recession. It continues to rest on two pillars, financial regulation and macroeconomic governance (aggregate demand rebalancing in particular), plus institutional reform in various areas (primarily the IMF, and more recently, under French guidance, the international monetary system). These lines of action have progressed usefully and should not be forgotten, but… Read more
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Time to deliver
12th May 2011
In a defining year for its credibility as a cooperation forum (for reasons, see my previous Editorial), the G20 is now approaching a critical juncture. The two meetings scheduled for June (a finance ministers and central bank governors meeting in Busan, Korea, on 4-5 June, in preparation for a leaders’ summit on 23-24 June in Toronto, Canada) are not the last planned for this year, but will unquestionably set the tone going forward and signal what can realistically be achieved in later months. In June we will probably know better how the postcrisis reform program will look like: what can be achieved and what will remain in the book of intentions. We will also begin to understand if the decision… Read more
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Forty years on
11th April 2011
G20 ministers and governors meet again in Washington this week, in preparation of the Cannes summit of November. Unavoidably, the agenda contains a large portion of déjà vu: global imbalances, macropolicy coordination, financial reform, all themes commented repeatedly in this Monitor. But there are also news; in particular the suggestion, in the background, by the French presidency to revisit the international monetary system (IMS). As we approach the 40th anniversary of Nixon’s fateful decision (15 August 1971) to suspend the dollar convertibility into gold, this rethinking is also chronologically attractive. Here are some personal views on this issue – Bruegel is preparing an extended report, in cooperation with CEPII, that will appear later this year. For more than a century,… Read more
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Forty years on
11th April 2011
G20 ministers and governors meet again in Washington this week, in preparation of the Cannes summit of November. Unavoidably, the agenda contains a large portion of déjà vu: global imbalances, macropolicy coordination, financial reform, all themes commented repeatedly in this Monitor. But there are also news; in particular the suggestion, in the background, by the French presidency to revisit the international monetary system (IMS). As we approach the 40th anniversary of Nixon’s fateful decision (15 August 1971) to suspend the dollar convertibility into gold, this rethinking is also chronologically attractive. Here are some personal views on this issue – Bruegel is preparing an extended report, in cooperation with CEPII, that will appear later this year.For more than a century, the… Read more