Come Thursday and the G-20 summit will be kicked off in London amidst much media attention because it will be the epicenter of major financial happenings as major policy decisions will be debated and made here. For those who still aren’t aware of its existence, G-20 is an elite group of finance representatives of the world’s most economically developed and major developing countries, bringing together the seven leading economies(USA, UK, France, Germany, Canada, Japan and Italy) , the G4(Brazil, China, India and Russia), Australia, Turkey, Indonesia, South Korea, Argentina, Mexico, South Africa and Saudi Arabia. It was convened in the year 1999 and for the first time the heads of the state are going to be representing their respective countries. Till date it has been an elite affair of the financial heads.
The major agenda of this summit is indeed going to be coming up with means to combat current global economic recession and re-building faith in the banking system and giving it a much needed overhaul on the national as well as international basis. According to a report issued by a group charged with formulating agenda, the major policy decisions to be taken would concentrate on the matters pertaining to risk management, need for credit creation, fiscal stimulus, stricter market regulation and higher corporate governance.
The topic of executive bonuses and remittances will also be taken up head on, which is also a major cause behind the current crisis, others being derivatives contracts, faulty gradation by the credit rating agencies and the accounting standards followed by the companies. Private hedge – funds will also be put under strict scrutiny. Steps will be agreed upon that are to be taken to avoid future risk accumulation and banks will be directed to generate enough liquidity and reserves to combat such a crisis in future.
Rumors are that IMF’s responsibilities will be increased with it being set to be granted special powers to help the third world countries facing the brunt of the crisis. The talk of setting up a new international body to oversee markets is ruled out and instead an early warning system about the forthcoming perils is to be created which will be operated by the IMF and FSF (Financial Stability Forum).
Greater international co-operation and co-ordination in financial transactions is the need of the hour rather then the policies of protectionism and low credit creation. The summit takes place on Thursday and we all hope that such decisions as that would restore the global economic conditions back to normal will be taken.
