The Group of 20 Summit in London is focused on promoting global trade and rejecting protectionism, leaders announced Thursday. The high-profile summit was convened as world leaders attempt to address the steepest global downturn since the Great Depression, and in the official communiqué, G20 members pledged to do whatever necessary to end the economic crisis.
In addition, members pledged to work on a united reform of the international regulatory system, with British Prime Minister Gordon Brown stating that the era of Washington Consensus, or the promotion of deregulation and free markets, is over.
The old Washington consensus is over, Brown said. We have reached a new consensus that we take global actions together.
In order to do this, G20 members have agreed to establish a new Financial Stability Board (FSB). The FSB will regulate hedge funds, along with other systemically important financial institutions.
The G20 agreement brings shadow banking system, including hedge funds, within the global regulatory net, Brown said.
In addition, the G20 leaders agreed to take action on bonuses to create sustainable compensation schemes. Credit-rating agencies will be required to meet a universal code of good practice, and accounting-standard setters were told to improve the way they determine the value of assets.
Brown noted that the summit was very productive and that the issues that people thought divided us did not divide us at all.
There was substantial agreement on the need for us to do whatever is necessary to return to growth, he said.
When asked if he was being totally honest about general agreement, Brown said that it was remarkable that countries that would never have sat at the table are now coming together. The bad banks affect every good bank, he noted.
Brown noted that G20 members have agreed to a fiscal stimulus worth around $5 trillion as well as to tripling funding to the International Monetary Fund to $750 billion in order to assist poor nations at this trying time.
We are undertaking an unprecedented fiscal expansion, which will save or create millions of jobs which would otherwise have been destroyed, and that will, by the end of next year, amount to $5 trillion, raise output by 4 percent, and accelerate the transition to a green economy, Brown said.
There will be another G20 this year, Brown said, although the venue and date have yet to be named.
One of Brown's key concerns is protectionism, and he warned that those nations engaged in protectionism would be named. The G20 will make it sure that people who want to trade will have the resources that are sadly lacking at the moment, Brown said.
In the official G20 communiqué, members also pledged to build inclusive green and stable sustainable recovery, to strengthen financial systems and restore lending, and to restore confidence and jobs.
This sense of cooperation in the face of crisis is encouraging, Brown said.
I feel that world leaders have come together.These are detailed measures that include sums of money, that include timetables, that include an end to the way tax havens work, he said, adding that is something that would have been unimaginable 5 months ago.
The era of banking secrecy is over, Brown said.
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