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G20 financial reform progress expected
(Agencies)
Updated: 2009-09-24 19:51 BERLIN/PITTSBURGH: The Group of 20 summit this week will be key for financial reforms, German Chancellor Angela Merkel said on Thursday, warning that efforts to make the world less prone to financial disasters may lose momentum.
Merkel, speaking before departing for the summit, said however that G20 countries looked to be on the right track for now and Axel Weber, the head of the German central bank, voiced optimism that G20 leaders would agree to changes in the global financial system.
The sheer volume of problems the two-day summit is set to address - from the lopsided global growth model to climate change, tougher financial regulation and caps on bankers' pay - means expectations for any near-term action are low. But Weber told a German radio he was optimistic the summit would prove more productive than previous meetings. "I am happy that G20 leaders and regulators have a broad consensus on the issues and on the agenda," Weber, who is European Central Bank Governing Council member, said. European leaders are pressing for a deal on financial regulation reforms, while President Barack Obama's agenda will be topped by a plea for coordinated policies that will even out massive imbalances between export powerhouses and the deeply indebted United States. Policymakers are seeking to curb excessive risk taking that roiled financial markets and shoved the world economy into recession and several European leaders are pushing for crackdowns on bankers' lavish pay packages. The meeting in Pittsburgh, which has seen its own economic hardship as its once mighty steel industry lost out to global competitors, is the third G20 gathering since the collapse of investment bank Lehman Brothers a year ago. G20 leaders first met when the world economy was in throes of its worst financial crisis in generations, and even countries that had escaped the banking crisis were battered by a slump in global trade. Now that the recession in many countries appears to be ending, the challenge is to sustain the sense of urgency seen in April when the G20 agreed to work together to rescue the world economy and pledged hundreds of billions of dollars to finance the IMF's crisis-fighting efforts. In the latest sign that the world economy was on the mend, the US Federal Reserve said on Wednesday growth has returned to the world's biggest economy. However, the meeting's final statement will say that short-term and long-term risks persist and will emphasize that more action is still needed to stabilize the economy, Japan's Kyodo News reported on Thursday, citing officials preparing for the summit. International Monetary Fund head Dominique Strauss-Kahn struck a similar note, saying G20 leaders should keep massive economic stimulus plans in place as long as millions of people who lost their jobs during the crisis remain out of work. "Once the fire is out, there's water everywhere, it has to be mopped up," he told Europe 1 radio. "In Pittsburgh, we have to say, there are still fires to be put out, we'll see later how to do the mopping up." But even as top officials repeat their assurances that they will not wind down their aid prematurely, Obama will seek support for his call for a concerted effort to put the global economy on a sounder footing over the long run. Washington wants G20 nations to commit to a joint effort to reduce the world's reliance on US shoppers by boosting consumption in exporting countries while encouraging debt-laden nations such as the United States to save more. But there is no roadmap on how that would be achieved. |
