Act now, don't be swayed by recovery signs: G20 report

By Fu Jing (China Daily)
Updated: 2009-09-10 08:36

World leaders should act immediately to regulate global financial sectors despite early signs of economic recovery, concluded a report to be published before the G20 Summit in Pittsburgh later this month.

The Special G20 Report: Flashpoints for the Pittsburgh Summit, prepared by the Canada-based Centre for International Governance Innovation, will be officially released this week in Ottawa, Washington and Pittsburgh.

Andrew Cooper, a professor on global governance at the Waterloo University and one of the editors of the report, said the report recognizes the initial success of the G20 in developing approaches to stabilize the global economy and charts out reforms for financial architecture over the short- to medium-term. The report promotes initiatives that will strengthen global economic governance while adapting new global realities.

Cooper said that during the Pittsburgh Summit from September 24-25, G20 leaders must act quickly to deliver on past summit commitments and reduce the gap between declaration and action on core economic and structural concerns.

"Dangerous structural shoals remain below the apparent immediate success of mass infusions of stimulus funds that could still upset the economic recovery or even lead to a recurrence if left uncharted," said Cooper.

Economists and professors from across the world who contributed to the report said there has been much slippage between G20 declarations and actual implementation.

Ngaire Woods, a professor at Oxford University, said the G20 has been distracted in regulating things that were not central to the causes of the crisis and must immediately address elements - including capital and liquidity requirements, credit-rating agencies, financial sector remuneration and credit default swaps -that were.

Many scholars have been questioning whether the International Monetary Fund (IMF), the World Bank and other global aid institutions are properly equipped to deal with the crisis. Prior to the crisis, it was widely accepted that the IMF's governance, mandate and financial structure all needed overhauling to enhance the institution's relevance, legitimacy and effectiveness.

Debra Steger, professor at the University of Ottawa, said the IMF and World Bank are in crisis - their mandates and governance mechanisms are out of date and the World Trade Organization is in a state of paralysis.

"Transformational moments in history come along very rarely," said Steger, adding that the international economic system needs to be redesigned to accommodate new realities. "This is one of those moments."

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