The Group of 20’s (G20) accord follows heated discussions in which French President Nicholas Sarkozy reportedly threatened to walk out. All leaders hailed the agreement as a success.
IMF, Tax Haven Banking Rule Changes
The G20 agreed to give $500 billion to the International Monetary Fund (IMF) in order to help fund loans to hard-hit and developing economies.
Developing nations pressed for and got increased say in how that money was used. After agreeing to give $40 billion US to the IMF, China was assured reforms to the institution’s voting structure would be sped up. Canada for its part doubled its earlier contribution to $22 billion.
French President Nicholas Sarckozy, and German Chancellor Angela Merckel allied to obtain stricter rules dealing with tax havens. The G20 agreed to the creation of a black list of countries serving as tax havens. Countries refusing to make their financial systems more open would face sanctions that include the withdrawal of IMF investment funds. In comments printed by the Toronto Star Sarkozy was pleasantly surprised he received as much as he did: “We would never have hoped to get this much.”
Canada provided the inspiration for changes to G20 banking rules. The new framework sets up minimums for capital requirements, as well as measures to encourage the disclosure of good banking practices. The new regulations give responsibility to central banks, financial regulators and overseers to ensure system stability. They call for regular meetings of national financial authorities with their international counterparts. For example meetings of Canada’s Finance Minister with the British Chancellor Of The Exchequer.
Canada is being hailed as a country with successful regulation of its financial institutions.
Leaders Call G20 Summit a Success
As the summit ended, all hailed it as a success. In remarks printed by the Toronto Star American President Barack Obama called it a “turning point in our pursuit for global economic recovery.”
In the same article, the spirit of optimism continued with Canadian Prime Minister Stephen Harper realizing the impact of the agreement if all nations implemented it: “There is a strong will on the part of all major nations to act on this, and co-ordinate their actions.” He tempered the optimism with an observation that the world wasn’t out of the woods yet. Harper believes Canada is through the worst of it.
Despite the positive sentiments voiced by the leaders, the summit gets a mixed reaction in the press. China’s People’s daily hails their nation’s success, saying China is acting responsibly as it increases its international cooperation. Pakistan meanwhile doubts the international community’s will to actually change its financial institutions (IMF, and the World Bank). Britain’s Financial Times had the warmest reaction, saying the world was a better place for having held the summit.
The next G20 Summit will be held later this year.
Laura Steiner - First hand experience covering politics at all levels; municipal, provincial, and federal.
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