Global leaders met in London Thursday to face the most severe global economic crisis since the Great Depression. The attendees expressed satisfaction with the outcome of the meeting, with leaders agreeing to both do whatever is necessary to stimulate the global economy, as well as enact regulatory reforms to strengthen the financial system.
The summit was President Barack Obama's first major international meeting, and he praised the agreements reached by leaders as turning point in our pursuit of global economic recovery.
G20 members, who represent 85 percent of the world's economy, have agreed to enact fiscal stimulus of around $5 trillion.
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, United Kingdom Prime Minister Gordon Brown said.
However, the president cautioned that while the reforms agreed to are necessary, they might not be sufficient.
In order to ensure that a stable recovery takes hold, the G-20 will meet again in the fall.
Brown stated 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.
While noting that it is important that nations agree on an action plan, the president said individual actions remain just as important.
The actions that each of us take in our individual countries are absolutely vital, Obama said, urging nations to move to take care of the toxic assets that have brought the banking system to a standstill.
The quicker they are, the more effective they are, Obama said. This is not a panacea, but it is a critical step.
Obama called the London Summit historic because of the size and scope of the challenges we face, and because of the timeliness and magnitude of our response.
Obama stressed that the challenge, which includes a contracting global economy, shrinking trade, rising unemployment, and a near-frozen international financial system, requires significant action on the part of global economic leaders.
Nearly all of the nations have acted to stimulate demand within their respective economies, Obama noted.
The United States is also partnering with the private sector to clean out legacy assets that are crippling some banks, and using the full force of the government to ensure that our action leads directly to loans that people and businesses depend upon, he said. These efforts will be amplified by our G-20 partners, who are pursing similarly comprehensive programs.
Obama also noted that the G-20 would support developing countries, noting the decision to triple funding to the International Monetary Fund to $750 billion.
A strong statement against protectionism also came out of the summit, which Obama noted would grow our exports and create new jobs.
Brown noted that the summit was very productive and that the issues that people thought divided us did not divide us at all.
In terms of America's leadership role at the conference, Obama said that Americans exercise our leadership best when we are listening.we are going to have to lead by example.
However, the president recognized that there is the possibility that actions taken so far will not succeed.
Should the actions that we've taken individually and collectively so far not succeed.I think we've created a good foundation for this leadership to come back together again and take additional steps until we get it right, Obama said.
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