Transcript Document
Soo Ah, Fahmid, Yun What is G-20? It is a group of finance ministers and central bank governors from 20 economies The 20 economies are comprised of the 19 largest national economies and the European Union It is a forum for cooperation and discussions on matters relating to the international financial system Countries involved in the 2009 G-20 Summit • • • • • • • • • • • • • Argentina Australia Brazil Canada China France Germany India Indonesia Italy Japan Mexico Netherlands* • South Korea • Russia • Saudi Arabia • South Africa • Spain* • Turkey • US • UK • EU Background of G20 The G20 was created response to the financial crises of late 1990s It was aimed to help out developing countries that were not adequately included in the core of global economic discussion and governance There were several different types of G-# meetings: G-7 G-22, G-33 Background of the Recession One of the leading problems that countries are now suffering from the recession is “Toxic Assets” Toxic Assets – certain financial assets when their value has fallen significantly and when there is no longer a functioning market for those assets US economy = boom = many people borrowed money to buy property (homes, land) But recession = people lost jobs = decrease in income They couldn’t pay mortgage so put land on sale Value of assets fell drastically due to over supply Banks seize properties from their customers Banks lost money This loss resulted in a decrease in availability of money for loans The Agenda of G20 Stimulate growth and employment and revive the global economy through macro-economic actions Reform and improve financial sector and system Reform international financial institutions (IFIs) IMF – International Monetary Fund FSF – Financial Stability Forum World Bank General Outcome from the G20 Financial Stimulus – $1.1 trillion to stimulate growth Regulation – an agreement towards governments having greater control over banks Decreased Influence of the United States More government regulations over business US no longer be dominant force Other Outcomes of the London Summit World leaders set six pledges: restore confidence, growth and jobs Repair the financial system to restore lending Strengthen financial regulation to rebuild trust Fund and reform our international financial institutions to overcome the crisis and prevent future ones Promote global trade and investment and reject Build an inclusive, green and sustainable recovery protectionism Reforming the global banking system: bringing the shadow banking system including hedge funds within the global regulatory net New international accounting standards Regulation of credit rating agencies An end to tax havens (a country, which provides a no-tax or low-tax environment) that do not transfer information on request However… Nothing about Green Policies - Environmental groups were outraged that growth ≠ “green” growth Different Points of View Many countries and analysts believed that G20 will have no concrete agreements that will make impact France and Germany: why bother? France and Germany called for stricter financial regulations. UK and US wants large financial stimulus People are mad that the government is not protecting its domestic industries Evaluation Fiscal and Monetary policies! Buying toxic assets Providing additional funds for IMF Reducing taxes and interest rates Please Listen to us Was the G-20 Conference Successful? Yes First time “major” agreements have been made between countries such as abandonment of protectionism and collective $1.1 trillion of fiscal stimulus Some say the most succesful agreement was to meet in the future again There is more balance in power, as the US may no longer the dominant economic force Maybe In the past, the agreement to abandon protectionism in November 2008 failed. 17 out of 20 nations took protectionist measures since then This puts great doubt over sincerity and validity of the agreements What comes next? New meeting for further discussions yay Progress towards globalization and free trade Increase in development and growth in developing countries due to increased availability of fund for loans in the IMF End to the recession?