Transcript Ensure comprehensive financial regulation

G20 FINANCE
MEETING
Christine Lagarde
Christian Noyer
14-15 April 2011 – Washington DC
Réunion des ministres des finances et des gouverneurs des banques centrales du G20
G20 Finance Ministers and Central Bank Governors’ Meeting
18-19 février 2011
18-19 February 2011
The G20 Finance Meeting
accounts for 85% of the global economy
Equatorial
Guinea
Equatorial
Guinea
New ideas for a new world
Priorities of the French presidency of the G20
•
Continuation of ongoing efforts:
• Financial regulation
• Macroeconomic imbalances
(Framework for Strong, Sustainable and Balanced Growth)
• Development
•
Three new priorities set by President Sarkozy:
• Reform of the international monetary system
• Tackling commodity price volatility
• Global governance
 The goal: a stronger, more stable and more resilient global economy
Paris
Washington
Paris
18 - 19 février
14 – 15 avril
13 - 14 octobre
Cannes Summit
3–4 November
Areas of focus
Areas of focus:
1. Identify macroeconomic imbalances in order to reduce them and lay the
foundations for strong and sustainable growth
2. Reform the international monetary system to achieve financial stability in a
multi-polar world
3. Reduce excessive commodity price volatility and limit its impact
4. Ensure comprehensive financial regulation
5. Develop infrastructures in developing countries and provide innovative financing
for climate change
Washington G20 Finance Meeting
Principal expectations
Continue efforts begun at the meeting in Paris in February
1. Progress on the definition of indicative guidelines for the Framework for Strong,
Sustainable and Balanced Growth, in order to reinforce our capacity to
coordinate our economic policies
2. Follow up on the fruitful discussions at the High‐Level Seminar on the
International Monetary System in Nanjing
3. Guide ongoing work as regards financial regulation
4. Further elaborate G20 responses to commodity price volatility
5. Reaffirm the G20's support for efforts on innovative financing for both climate
change and development
Areas of focus
1. Identify macroeconomic imbalances in order to reduce them and lay the
foundations for strong and sustainable growth
2. Reform the international monetary system to achieve financial stability in a
multi-polar world
3. Reduce excessive commodity price volatility and limit its impact
4. Ensure comprehensive financial regulation
5. Develop infrastructures in developing countries and provide innovative financing
for climate change
1: Identify the sources
of macroeconomic imbalances…
Current imbalances in G20 countries
Etats-Unis
Déséquilibres(as
courants
des pays
a % of global
GDP)du G20
(en % du PIB mondial)
2.0%
United States
United Kingdom
Turquie
Turkey
Afrique du Sud
South Africa
Arabie Saoudite
Saudi Arabia
Russie
Russia
Mexique
Mexico
Corée
du SudKorea
South
Japon
Japan
ItalieItaly
Indonésie
Indonesia
Inde India
Germany
Allemagne
France
France
ChineChina
Canada
Canada
BrésilBrazil
Australia
Australie
Argentina
Argentine
Royaume-Uni
1.5%
2.0%
1.0%
1.5%
0.5%
1.0%
0.0%
0.5%
0.0%
-0.5%
-0.5%
-1.0%
-1.0%
-1.5%
-1.5%
-2.0%
-2.0%
-2.5%
-2.5%
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
…and agree on indicative guidelines…
Agreement on a set of indicators in February in Paris
• Public debt and fiscal deficit;
• Private savings rate and private debt;
• External imbalances: trade balance, net investment income
flows and transfers, taking due consideration of exchange
rate, fiscal, monetary and other policies.
Discussions during Washington G20 Finance meeting
• Defining the indicative guidelines with stricter criteria for
systemic economies
• Identifying the main macroeconomic imbalances
• Preparing the next steps of the mutual assessment process
=> action plan for a strong, sustainable and balanced growth
(Cannes, November 2011)
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Titre de la présentation
…in order to improve coordination
for growth
Improving the Framework for Strong, Sustainable and
Balanced Growth
Agreement on
indicators for
assessing major
imbalances
(February)
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Titre de la présentation
Identification of
imbalances with
the help of
indicative
guidelines
An ambitious action
plan :
- Reducing imbalances
- Supporting growth
Areas of focus
1. Identify macroeconomic imbalances in order to reduce them and lay the
foundations for strong and sustainable growth
2. Reform the international monetary system to achieve financial stability in
a multi-polar world
3. Reduce excessive commodity price volatility and limit its impact
4. Ensure comprehensive financial regulation
5. Develop infrastructures in developing countries and provide innovative financing
for climate change
International Monetary System
Actions to take
What we plan to do:
• Improving economic policy coordination (surveillance, exchange
rates)
• Reducing the need to accumulate foreign currency reserves
• Better monitoring and understanding international capital flows
• Ensuring the emergence of new international currencies
What we do not intend to do:
• Going back to fixed exchange rates
• Questioning the role of the dollar
• Introducing widespread capital controls
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Working areas
Exchange rates
Global liquidity management
Surveillance
Definition and measurement of global
liquidity
Capital flows management
The role of SDR
SDR basket composition
Surveillance of capital flows
Discussion about international reserves
Financial Safety Nets – towards a new
instrument for providing short-term liquidity
Development of local financial markets
Relationships between Regional Financial
Arrangements and the IMF
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2.1. Reduce the need to accumulate
reserves
Accumulating reserves is costly
• For the country concerned (opportunity cost)
• For the global economy (source of imbalances)
Areas of focus: improving liquidity supply in times of
crisis
• Assessment of « Financial Safety Nets » and improvement, if
needed, particularly to deal with systemic crises
• Improved coordination between existing international and
regional arrangements
• Discussion on the optimal level of reserves
• Development of local currency financial markets
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Titre de la présentation
2.2. Better monitor
international capital flows
The size of capital flows is problem for
recipient countries but so is the multiplication
of unilateral measures to face them
Areas for discussion
• Setting up a framework allowing to monitor capital flows. This
framework will allow:
• to discuss the impact of economic policies of both source and
recipient countries on this flows, in a cooperative way
• to identify economic policy coordination patterns which are
mutually beneficial
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Titre de la présentation
2.3. Ensuring the emergence of new
international currencies
A risky transition
New economic
focal points
New
international
currencies
Possible solutions
• Careful planning of the inclusion of new currencies in the
composition of the SDR basket
• In the longer term, reflect on the role of the SDR in the IMS
• Develop local currency trade settlement in emerging
economies
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Titre de la présentation
Areas of focus
1. Identify macroeconomic imbalances in order to reduce them and lay the
foundations for strong and sustainable growth
2. Reform the international monetary system to achieve financial stability in a
multi-polar world
3. Reduce excessive commodity price volatility and limit its impact
4. Ensure comprehensive financial regulation
5. Develop infrastructures in developing countries and provide innovative financing
for climate change
3. Reducing commodity price volatility
and limiting its impact
Imperfect markets
• Incomplete information about physical assets, which does not
cover all commodities
• The physical and financial commodities markets are insufficiently
regulated compared to other markets, and thus open to abuses
What we plan to do
• Reduce volatility through higher transparency on the fundamentals
(consumer behavior, supply determinants, inventories)
• Use risk-management tools to cushion the impact of volatility
• Better forecasting and management of food crises
• Prevent and limit market abuse and ensure good risk
management, through a regulation of all markets and financial
instruments
• Regulate commodity derivatives, like other derivatives
3. Commodity price volatility –
G20 Finance meeting Washington
Energy
• Support the JODI oil database and efforts on price-setting
agencies
Food security
• Discussions of the report by international organizations on
agricultural and food commodity price volatility, and on
hedging and risk management tools
Regulation of commodity derivatives
• Assessment of the work on regulation and supervision of
commodity derivatives, to prepare concrete recommendations
for the G20
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Titre de la présentation
Areas of focus
1. Identify macroeconomic imbalances in order to reduce them and lay the
foundations for strong and sustainable growth
2. Reform the international monetary system to achieve financial stability in a
multi-polar world
3. Reduce excessive commodity price volatility and limit its impact
4. Ensure comprehensive financial regulation
5. Develop infrastructures in developing countries and provide innovative financing
for climate change
4. Ensuring comprehensive
financial regulation
Goal
• Harmonized and effective implementation of the commitments
made by the G20
What we plan to do
• Coordinated implementation of Basel 3
• Implementation of FSB standards on compensation, accompanied
by an effective peer review process
• Reduce reliance on rating agencies
• Ensure clearing of standardized OTC derivatives
• Converge towards a single set of high quality accounting standards
by the IASB and FASB and reform the governance of IASB
4. Ensure comprehensive
financial regulation
Goal
• Protect citizens, the financial system and the real
economy against systemic risk
What we plan to do:
• Identify systemic financial institutions
• Set up firewalls and safeguards in the event of a failure:
higher loss absorbency measures, resolution regimes
and coordination between colleges of supervisors
• Increase the integrity of the financial markets and extend
financial regulation to the shadow banking sector
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4. Financial regulation
G20 Finance meeting Washington
Governance of the Financial Stability Board (FSB)
• Evaluation of the FSB's proposals concerning its governance
and resources
Systemic risk
• Continue efforts to identify systemic financial institutions and
the higher loss absorbency measures to apply to them
• Define the scope of the shadow banking sector
Continued efforts
• Monitor implementation of compensation policies standards
• Support the convergence of accounting standards
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Titre de la présentation
Areas of focus
1. Identify macroeconomic imbalances in order to reduce them and lay the
foundations for strong and sustainable growth
2. Reform the international monetary system to achieve financial stability in a
multi-polar world
3. Reduce excessive commodity price volatility and limit its impact
4. Ensure comprehensive financial regulation
5. Develop infrastructures in developing countries and provide innovative
financing for climate change
5. Meeting our commitments
towards development and
the fight against climate change
Goal
• Mobilize financing for development and for the fight against climate
change
What we plan to do
• Follow up concretely on the High-Level Advisory group on Climate
Financing
• Mobilize public and private investors to build infrastructures that
are necessary to the sustained development of developing
countries, particularly in Sub-saharan Africa, with the help of the
high-level panel chaired by Tidjane THIAM, and the multilateral
development banks
• Identify innovative financing for development, building on the
mandate given to Bill GATES by President SARKOZY