G – 20 pledges $1 trillion & concerted fiscal steps
The Financial Express, April 3, 2009, Page 1
Agencies
LondonG-20 leaders agreed a trillion-dollar deal on Thursday to combat the deepest economic downturn since the Great Depression. At their summit, they also signed off on plans to commission blacklists of tax havens, tighten financial norms to bring hedge funds and credit rating agencies under closer supervision, as well as institute new rules on linking executive pay to performance. US stocks jumped on the G-20 news, along with a decision by Washington to loosen accounting rules for toxic assets.
“Concerted measures taken by the G-20 economies will raise world output by 4% by the end of next year,” a final communiqué said. “We are undertaking an unprecedented and concerted fiscal expansion, which will save or create millions of jobs that would otherwise have been destroyed, and that will, by the end of next year, amount to $5 trillion, raise output by 4% and accelerate the transition to a green economy,” the communiqué added.
“We are committed to deliver the scale of sustained fiscal effort necessary to restore growth,” it said. The statement also said G-20 central banks had pledged to maintain expansionary policies as long as necessary and to use all available policy tools.
“This is the day that the world came together, to fight back against the global recession. Not with words, but a plan for global recovery and for reform and with a clear timetable,” British Prime Minister and summit host Gordon Brown said. He said that while there were no quick fixes, the decisions meant that “we can shorten the recession and we can save jobs”.
“For the first time we have a common approach to cleaning up banks around the world, to restructuring of the world financial system. We have maintained our commitment to help the world’s poorest,” Brown said. “This is a collective action of people around the world working at their best.”
Brown said the G-20 also agreed to create a new supervisory body to flag potential problems in the global financial system. He said the G-20 will create a new financial stability board to ensure cooperation across frontiers, to spot risks to the world economy and—together with the IMF—provide “the early warning mechanism that this new global economy needs.”
Brown said it is essential that the world does everything necessary to “rebuild trust” and make sure “a crisis such as this” never happens again.
The sweeping G-20 communiqué bridged a gap between the US and European countries led by France and Germany over how far to push changes on regulation to curb the market excesses that led to the current crisis.
French President Nicolas Sarkozy said the results were beyond what could have been imagined. Addressing a key demand from France and Germany, Brown said the leaders agreed there will be an end to tax havens that do not transfer information on request. “The banking secrecy of the past must come to an end.”
He said leaders agreed to commit new resources of $1 trillion that are available to the world economy through the International Monetary Fund and other institutions. This included $250 billion of IMF reserve units called Special Drawing Rights. This is available to all IMF members, Brown said. In addition, the IMF would see its own resources tripled, with up to $500 billion of new funds.
The G-20 nations also agreed to renounce protectionism and pledged $250 billion in trade finance over the next two years—a key measure to help struggling developing countries, whom they promised to give a greater say in world economic affairs. The G-20 will hold a third summit on the financial crisis by the end of autumn in Japan to follow up the world leaders’ meetings in London this week and in Washington in November, Italy’s Silvio Berlusconi said on Thursday.
The Financial Express, April 3, 2009, Page 1
Agencies
LondonG-20 leaders agreed a trillion-dollar deal on Thursday to combat the deepest economic downturn since the Great Depression. At their summit, they also signed off on plans to commission blacklists of tax havens, tighten financial norms to bring hedge funds and credit rating agencies under closer supervision, as well as institute new rules on linking executive pay to performance. US stocks jumped on the G-20 news, along with a decision by Washington to loosen accounting rules for toxic assets.
“Concerted measures taken by the G-20 economies will raise world output by 4% by the end of next year,” a final communiqué said. “We are undertaking an unprecedented and concerted fiscal expansion, which will save or create millions of jobs that would otherwise have been destroyed, and that will, by the end of next year, amount to $5 trillion, raise output by 4% and accelerate the transition to a green economy,” the communiqué added.
“We are committed to deliver the scale of sustained fiscal effort necessary to restore growth,” it said. The statement also said G-20 central banks had pledged to maintain expansionary policies as long as necessary and to use all available policy tools.
“This is the day that the world came together, to fight back against the global recession. Not with words, but a plan for global recovery and for reform and with a clear timetable,” British Prime Minister and summit host Gordon Brown said. He said that while there were no quick fixes, the decisions meant that “we can shorten the recession and we can save jobs”.
“For the first time we have a common approach to cleaning up banks around the world, to restructuring of the world financial system. We have maintained our commitment to help the world’s poorest,” Brown said. “This is a collective action of people around the world working at their best.”
Brown said the G-20 also agreed to create a new supervisory body to flag potential problems in the global financial system. He said the G-20 will create a new financial stability board to ensure cooperation across frontiers, to spot risks to the world economy and—together with the IMF—provide “the early warning mechanism that this new global economy needs.”
Brown said it is essential that the world does everything necessary to “rebuild trust” and make sure “a crisis such as this” never happens again.
The sweeping G-20 communiqué bridged a gap between the US and European countries led by France and Germany over how far to push changes on regulation to curb the market excesses that led to the current crisis.
French President Nicolas Sarkozy said the results were beyond what could have been imagined. Addressing a key demand from France and Germany, Brown said the leaders agreed there will be an end to tax havens that do not transfer information on request. “The banking secrecy of the past must come to an end.”
He said leaders agreed to commit new resources of $1 trillion that are available to the world economy through the International Monetary Fund and other institutions. This included $250 billion of IMF reserve units called Special Drawing Rights. This is available to all IMF members, Brown said. In addition, the IMF would see its own resources tripled, with up to $500 billion of new funds.
The G-20 nations also agreed to renounce protectionism and pledged $250 billion in trade finance over the next two years—a key measure to help struggling developing countries, whom they promised to give a greater say in world economic affairs. The G-20 will hold a third summit on the financial crisis by the end of autumn in Japan to follow up the world leaders’ meetings in London this week and in Washington in November, Italy’s Silvio Berlusconi said on Thursday.
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