September 2009

On September 24-25, twenty world leaders met for the third time this year and reiterated their common goal for global cooperation on the road to recovery from the financial crisis. The G20, which includes developed nations and fast-growing emerging economies such as Brazil, China and India, accounts for about 90% of the world’s economic activity; it is quickly replacing the G8 as the leader of world economic management.

The following important points emerged during the Summit:

• A stronger regulatory framework and macro- economic policy is necessary for a sustainable and balanced growth of the world economy
• Due to the current economic situation, the United States should no longer be viewed as the consumer of last resort; countries such as China need to boost domestic demand and stimulate their own consumer spending
• The G20 pledged to shift 5% in the International Monetary Fund’s (IMF) quota share to emerging economies from over-represented countries such as Saudi Arabia, with the goal to improve the organization’s effectiveness by increasing voting shares and access to IMF loans for developing countries. Also, at least 3% of the World Bank’s shares will shift to these emerging countries.
• Although no cap has been adopted on banking bonuses as requested by many European governments, tighter regulations will be enforced on financial systems, such as enforcing new guidelines for financial pay schemes, in order to limit risk taking and build up new capital.
• Little progress was made on climate change, although President Barack Obama urged the World’s nations to end their subsidies for fossil fuels such as coal and oil, which are the main sources of global warming according to scientists.