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
Bruegel blog
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Back into action
25th August 2011
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G20 and financial regulation
28th June 2011
Bruegel Senior Fellow Nicolas Veron analysis in this month's column why financial regulation failed to find greater focus during the G20 summit in Toronto. Le sommet de Toronto, le quatrième du G20, a enregistré peu de progrès notables en matière de régulation financière, un des éléments clés de l’agenda initial de ce groupe. Lors du premier sommet fin 2008 à Washington, de nombreux dirigeants, en particulier européens, avaient mis l’accent sur la nécessité d’apporter « des solutions mondiales au problème mondial » de la crise. Le but semblait être d’harmoniser la réglementation et les pratiques afin de sécuriser uniformément le système financier. Parmi les 47 points mentionnés en conclusion de ce sommet, pas moins de 38 concernaient la régulation financière.… Read more
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The G20 needs to refocus its financial regulatory agenda
17th June 2011
The G20 leaders meet again in Toronto on June 26-27, and hopefully will make progress on reform of the International Monetary Fund and other issues of global economic governance. But on one distinctive part of their agenda, financial regulation, achievements so far are less impressive than the initial ambition.At the first G20 summit in November 2008 in Washington, shortly after the Lehman Brothers collapse, there was much rhetoric, especially from Europeans, in support of “global solutions to global problems.” The implied goal was global harmonization of financial rules to restore financial stability, eliminate regulatory arbitrage (banks shopping around for the most favorable regulations), and ensure fairer competition. Financial regulation represented no fewer than 38 out of that summit’s 47 action… Read more
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The G20 - a group in search of a mission?
17th June 2011
In the last few years, the debate about the supremacy of the G20 over the G7 was simple: the G7 didn’t anymore represent the key players in the global economy, and thus had lost legitimacy. It was time to move to the G20 as the center of global policy coordination.And the success was immediate. The G20 managed to agree quickly on a global fiscal stimulus and on a sharp increase in resources for the IMF, thus contributing decisively to greatly reduce the tail risk of the global economic downturn. Once economic agents realized this, and with the help of aggressive easing of monetary policy, markets and the global economy rebounded sharply. The G20 had saved the day.Since then, however, it… Read more
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A Comprehensive Plan for the Shadow Banking System
15th June 2011
When the G20 meets in Toronto on June 23rd and 24th, it will say some predictable things. It will affirm the importance of fiscal consolidation. It will underscore its commitment to strengthening financial regulation. It will reiterate the importance of avoiding protectionism and narrowing global imbalances. Here is a plea that it also say some surprising things. First, G20 members should explain that they are committed to pursuing fiscal consolidation in ways that avoid damaging growth potential. This means limiting cuts to public investment. It means not gutting education, public support for R&D, and infrastructure spending,. Governments with serious budgetary problems have repeatedly warned that no category of spending is exempt from cuts. Well, some categories should be protected precisely… 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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The global scoreboard to address imbalances: remarks on the G20 indicative guidelines for assessing persistently large imbalances
20th April 2011
At the meeting in Washington on April 14-15th, G20 leaders agreed on the way forward for promoting external sustainability as part of the Mutual Assessment Process. The approach they agreed upon is a two-step procedure. In the first step, a number of indicators will be measured against a benchmark reference value. Countries that are then judged to be problematic will subject to an an in-depth assessment of the nature and root causes of these imbalances and of any impediments to adjustment. Based on an assessment by the IMF and the G20, the G20 plans to ascertain the set of corrective and preventive measures that will form the 2011 action plan to ensure “strong, sustainable, and balanced growth”, to be discussed… Read more
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The global scoreboard to address imbalances: remarks on the G20 indicative guidelines for assessing persistently large imbalances
20th April 2011
At the meeting in Washington on April 14-15th, G20 leaders agreed on the way forward for promoting external sustainability as part of the Mutual Assessment Process. The approach they agreed upon is a two-step procedure. In the first step, a number of indicators will be measured against a benchmark reference value. Countries that are then judged to be problematic will subject to an an in-depth assessment of the nature and root causes of these imbalances and of any impediments to adjustment. Based on an assessment by the IMF and the G20, the G20 plans to ascertain the set of corrective and preventive measures that will form the 2011 action plan to ensure “strong, sustainable, and balanced growth”, to be discussed… 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