President Barack Obama concluded his first international summit Thursday, as the Group of 20 meeting wrapped up in London. Leaders from around the world agreed to do whatever is necessary to stimulate global economic growth as well as to promote regulatory reform. President Obama called the agreements reached by leaders the turning point in our pursuit of global economic recovery.
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, Obama announced.
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.
There was an air of change at the summit, with British Prime Minister Gordon Brown stating that the era of Washington Consensus, is over.
Members of the G-20 have reached a new consensus that we take global actions together, Brown said.
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.
Part of the reforms enacted include compensation limits and oversight of hedge funds. In order to do this, G-20 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 G-20 agreement brings shadow banking system, including hedge funds, within the global regulatory net, Brown said.
In addition, the G-20 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.
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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