Toronto Just Before G20 Summit
by Greg Knapp
The group of the G20 finance chiefs and central bankers met in Washington to study policies that may endanger the global economic balance. A consensus concerning the need to highlight issues and correct them before they actually affect the economy on a global scale had already been reached in Toronto in 2010. However, much has changed since then; now, the worst stages of the recession are over and the economy is strengthening despite occasional uncertainties. Free of the pressure the global leaders had to face in Toronto, the G20 was looking for new ways of organizing the world economy as well as trying to settle on rules that may prove helpful by preventing the crises in the future.
Getting over the hurdle
During the talks in Washington, the finance ministers agreed to establish a new surveillance system focused on identifying and fixing potential imbalances in the world economy. They proposed four methods the G20 will use to highlight possible flaws in national economies – especially by indicating unhealthy budget deficits and external trade balances, and by monitoring other macroeconomic data.
The goal of the new G20 rules is to ensure more balanced global growth, as uneven trade and investment activities are considered one of the main causes of the recession. French Finance Minister Christine Lagarde commented on the measures: “The guidelines operate like a net which holds the countries which violate or do not respect them.”
The forum members further stated that, even though the recovery after the credit crisis is becoming self-sustained, certain doubts remain — especially concerning the turmoil in the Middle East and North Africa, as well as Japan’s recent natural disaster.
