G20 leaders at the London Summit
By Merle David Kellerhals Jr.
Washington, DC (RPRN)April 3, 2009– â€” Leaders of the worldâ€™s most powerful economies have pledged $1.1 trillion to restore credit, economic growth and jobs in the world economy.
â€œTogether with the measures we have each taken nationally, this constitutes a global plan for recovery on an unprecedented scale,â€ the leaders said in a communiquÃ© issued April 2 at the conclusion of the G20 London Summit. The gathering of leaders was held in the Docklands, a former shipping area on the Thames River that has undergone major redevelopment.
An emergency resources account of the International Monetary Fund (IMF), which is the emergency lender for nations in financial crisis, will be expanded to $750 billion, with an additional $250 billion for new Special Drawing Rights â€” an international reserve asset used by the IMF to supplement the existing reserves of member countries. The G20 leaders also agreed to provide at least $100 billion of additional lending to multilateral development banks, and ensure $250 billion of support for trade finance.
The leaders also agreed to get additional resources from IMF gold sales for finance for the poorest countries.
â€œBy acting together to fulfill these pledges we will bring the world economy out of recession and prevent a crisis like this from recurring in the future,â€ the communiquÃ© said.
British Prime Minister Gordon Brown, who hosted the financial summit of the most advanced and largest emerging-market countries, said after the meeting that this accord, which also includes regulatory reforms of financial institutions, â€œreflects a very high degree of consensus and agreement between all of us.â€
â€œToday the largest countries of the world have agreed on a global plan for economic recovery and reform,â€ Brown said. The plan addresses two broad areas of concern raised by the United States and several European nations â€” more economic stimulus paired with more regulatory reform.
The London Summit Leadersâ€™ Statement calls for the following measures:
â€¢ More regulation of financial institutions, instruments and markets, including hedge funds, which are unregulated investment vehicles used by institutional investors and the wealthy.
â€¢ New principles on executive pay and compensation to avoid schemes that encourage excessive risk taking and reward failure.
â€¢ A new Financial Stability Board with a strengthened mandate that includes all G20 countries, Spain and the European Commission to collaborate with the IMF and provide early warning of significant economic changes and financial risks that need to be addressed.
â€¢ Encouraging tax haven countries to comply with rules and regulations from the Organisation for Economic Co-operation and Development to fight money laundering and tax evasion, or face public condemnation and potential economic sanctions.
â€¢ After recovery occurs, encouraging commercial banks to build up more capital reserves during healthy economic times to act as a buffer against future economic downturns.
â€¢ Requiring credit rating agencies to adhere to an international code of good practices and eliminate conflicts of interest with other financial institutions to avoid providing unrealistic ratings of securities.
â€¢ Aggressively discouraging trade protectionism among nations, and remaining committed to reaching an ambitious and balanced conclusion to the international-trade-liberalizing Doha Development Round of trade negotiations, â€œwhich is urgently needed.â€ Finishing work on the trade agreement could boost the global economy by at least $150 billion annually, according to the statement.
â€œFor the first time, we have a common approach to cleaning up banks around the world, to restructuring of the world financial system. We have maintained our commitment to help the worldâ€™s poorest,â€ Brown said at a news briefing. â€œThis is a collective action of people around the world working at their best.â€
The G20 nations represent the worldâ€™s most powerful economies, with 90 percent of the worldâ€™s economic output, 80 percent of world trade and two-thirds of the worldâ€™s population.
The full text of the leadersâ€™ statement is available on a G20 Summit Web site.