G-20 Ministers Vowed To Tackle Global Financial Crisis
The G20 is made up of the finance ministers and central bank governors of 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States of America and the European Union, which is represented by the rotating Council presidency and the European Central Bank.
These finance ministers from the G20 member nations said that they are prepared to take bold action to tackle the global financial crisis. Britain's Chancellor of the Exchequer, Alistair Darling said the G20 would take whatever action was necessary next month.
The finance ministers of the G20 countries, who between them account for 85% of the world economy, also pledged that they would take sustained action to end the global recession.
Darling said he welcomed the G20's commitment to take “whatever action is necessary” to end the global recession and added that it was vital to boost confidence as well as supporting the banking system.
These finance ministers from the Group 20's leading economies pledged on Saturday, Mar.14, to "take whatever action is necessary" to restore growth, but they failed to agree on the coordinated spending packages that the U.S. said would help to hasten a global recovery.
Mr. Geithner left the meeting without an agreement to collectively beef up spending packages to stimulate more economic demand amid rising unemployment and fears of widespread deflation.
The Obama administration has been lobbying for such a plan, with some economists recommending fiscal stimulus packages equal to about 2% of annual global gross domestic product. But Washington has been disappointed by the responses of European partners that insist they have loosened government purse strings enough.
Instead, the G20 finance ministers urged the immediate implementation of already announced fiscal stimulus plans in the individual countries. The key priority would be to get credit flowing out of banks that are still wary of lending money.
At a summit in West Sussex, the finance ministers of the group of 20 (G20) leading nations agreed to increase the IMF's $250bn (£178bn) fund "very substantially", and said that the fund would lend cash to struggling countries before they face economic emergencies.
This week, Lord Turner, the chairman of the Financial Services Authority (FSA), will stress the need for international co-operation but stop short of calling for the establishment of a single global regulatory body.
He also singled out credit ratings agencies for greater oversight, which could pave the way for deeper and more comprehensive regulation of the shadow banking sector in the coming decades. These agencies have been blamed for creating false confidence in risky assets and exacerbating the worldwide financial crisis.
The finance ministers and central bankers set out a framework for dealing with bank rescues and for future regulation. Hedge funds will be more closely regulated, as will the sophisticated derivatives' markets that had provoked the global financial crisis.
Another area of agreement among the G20 was "to fight all forms of protectionism and maintain open trade and investment." France and Britain have been exchanging terse words over alleged protectionist practices benefiting, their respective auto industries.
The G20 issued a Communique after the meeting concluded on Saturday afternoon, with strong commitments to increase regulation of hedge funds, insisting that in the future "hedge funds or their managers should be registered and disclose appropriate information to assess the risks they pose."
Read the full text of the G20 Communique here.
British Chancellor Alistair Darling and U.S. Treasury Secretary Timothy Geithner also held a press conference after the G20 summit.
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