America.gov (Washington, DC)
Merle David Kellerhals Jr.Washington — U.S. Treasury Secretary
Timothy Geithner says a meeting
of the Group of 20 finance ministers in London
is an opportunity to assess what is working and
what is still needed to pull the global economy
out of one of the deepest recessions in decades.
"If you look at where we are today versus where
we were in March or April, I think it's reasonable
to conclude that the force of the policy response
that we put in place here and the G20 ...
has been very successful," Geithner said at
a September 2 press briefing in Washington.
"You're seeing now the first signs of growth ...
in this country and countries around the world."
The Group of 20 finance ministers and
central bank governors are meeting
September 4-5 in London in preparation for
the G20 Summit in Pittsburgh, September 24-25.
The G20, which was formed in 1999, includes
19 of the world's largest national economies
and the European Union.
The Pittsburgh Summit is a follow-up to a similar
meeting held in London last April and
an earlier summit held in Washington in November 2008.
Also participating in G20 summits are
the managing director of the International
Monetary Fund (IMF), the World Bank president,
and the chairmen of the IMF's Financial
Committee and Development Committee.
The G20 countries represent about 90 percent
of the global gross national product and nearly
80 percent of world trade.
They also include two-thirds of the world's population.
improvement in the basic confidence and
stability of the world's financial markets,
which is reflected in lower borrowing costs.
"Our emphasis is going to be on trying to make
sure that everyone understands that our basic
imperative is to make sure we have
the foundation in place for a self-sustaining
recovery led by private demand,
and that's going to require more work,"
Geithner told journalists.
In April, finance ministers and central bank governors
reached a consensus on a framework
of international financial reforms,
though making those reforms a reality is based
on legislating at the national level
to make them operational, Geithner said.
of principles to begin the discussion -- not to
reach agreement on, but to begin a framework
or discuss a framework of principles
on a new international capital accord that
will put in place -- again, once the crisis
is behind us -- a more conservative framework
of constraints on leverage in the financial sector
across the major, globally active
financial institutions," Geithner said.
This, Geithner said, is a critical part of making
the global financial system more stable and
reducing the risk that in the future another crisis
could occur with a failure of large, individual
financial institutions, which could threaten
the overall stability of the financial system.
"That's not something that we can accept.
And a critical part of preventing that in
the future is to know that the system will require
more conservative, carefully designed,
comprehensive standards for capital and
liquidity management for these
major institutions," he said.
French President Nicolas Sarkozy are expected
to press G20 leaders to limit the size of banks,
regulate executive bonuses and tighten
Many international economists and world leaders
have expressed concerns that a lack of
sufficient regulation on banks and financial institutions
contributed to the recession and its aftermath.
Geithner said he and his fellow finance ministers
will not talk about numbers at this meeting,
but about a framework for principles,
and also begin talking about timetables
for future regulatory commitments.
"I think one of the most important things
we've done in this crisis is to bring
the major economies of the world together,
including the major emerging economies like China,
India, and to get the world to commit to
a very aggressive approach to arrest the crisis,"
Geithner told reporters.
President Obama and his administration
are considering a requirement that banks,
especially those deemed too large to fail,
maintain larger capital levels,
but doing so requires an extraordinary
balance of competing regulations and requirements.
"This is of course a critical part -- it's not
the only part, but a critical part -- of making
the financial system more stable in the future
and reducing the risk that we face
in the future," Geithner said.
"This is not something we can
take a long time to do."
He said one critical challenge facing
the G20 economies is developing
an exit strategy.
After a self-sustaining recovery is in place,
the nations will need to reverse and dial back
extraordinary actions taken to end the crisis,
such as the huge stimulus measures taken
by the U.S. government and Federal Reserve
System to protect and strengthen the U.S. economy.
"That is going to require a very careful strategy
of coordination across countries, making sure
that across the monetary policy, fiscal policy
and financial measures we've taken,
we're finding the right balance between -- and
it's a difficult balance," Geithner added.
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