Africa: G20 Finance Ministers Meet to Assess Economic Recovery

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.

Geithner said there has been a significant
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.

"We're going to be outlining a framework
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.

German Chancellor Angela Merkel and
French President Nicolas Sarkozy are expected
to press G20 leaders to limit the size of banks,
regulate executive bonuses and tighten
capital requirements.
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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