Bold Actions Of G20 London Summit

As I recognize it, there remains a debate between those who believe that the current economic environment compels a dramatic rethink of the foundations, systems and structures upon which the global economy operates, and those who believe that such sweeping reforms are both unnecessary and politically impossible.

In short, there are those who seek to begin the process of crafting a ‘new Bretton Woods’ and those who seek to ban the use of that phrase altogether.

In my earlier post, I wrote(scribbled) about "the global financial sector is in need of structural reform". I believe that the current economic crisis provides an opportunity to reshape the global financial system in ways that more accurately reflect the global nature and risks inherent in 21st-century banking, finance and capital flows.

This G20 gathering represents a true ‘free market’ where there is competition for ideas, creativity and leadership. It provides the perfect opportunity for a 21st-century successor to the intellectual and creative leadership of John Maynard Keynes to emerge.
To be successful, it is imperative that the United States play an active leadership role at the London Summit. The US has a unique role. The failure of the US to assume a leadership role, especially with the presence of President Obama, would undoubtedly be seen as an
opportunity missed.

The most innovative and bold structural proposals have come from Europe, where a recent report by the High Level Group on Financial Supervision in the EU, under the direction of Jacques de Larosière, contains some very worthy, realistic and detailed recommendations.
Unofficial groups, such as the G30 Financial Reform Working Group chaired by Paul Volcker, have similarly issued reports which I urge summit participants to review carefully and consider seriously.
The proposal is important because it seeks to address the systemic nature of risk, which underpins the existing financial system, and also because of its inherent inconsistency.
Given the magnitude and scale of the issues now confronting summit participants, those officials tasked with its preparation should not feel bound to adhere strictl to the agenda and working groups created four months ago.
Now is not the time for caution, but rather the time for bold assertion of leadership, ideally by the United States, but hopefully with the collective support of the global community.

G-20 London Summit

India's Prime Minister Dr Manmohan Singh outlined his hopes for G20 London Summit in a statement before he travelled to the UK.

In it, Dr Singh said the G-20 has an important role to play in addressing the global economic and financial slowdown by taking coordinated and purposeful action.

The report said as follows:

"It is important that the Summit took credible decisions to reverse the current slowdown and to instil a sense of confidence in the global economy"

The statement set out a number of issues that Dr Singh views as requiring particular focus. The need to:

1. Ensure the adequate flow of finances to the developing countries to overcome the reversal of international capital flows and not retard progress towards the "Millennium Development Goals"
2. Avoid protectionism in the trade of both goods and services
3. Facilitate trade finance
4. Reform and restructure international financial market

Dr Singh emphasized that the time has come for the international economic and financial architecture to reflect contemporary economic strengths.

Although the meet do provide some of the most required stimulus to Global Economy with a power-packed 1.1t$ stimulus, the summit was the least to bother for India.

Seeing India as the 4th most strong country of G20, expectations were more on accomplishing goals concerning all Developing Countries including BRIC(Brazil, Russia, India, China). But the Summit was more like a G8(G7 + Russia) + China affair with India as a spectator to some extent.

The only good thing which happened was the statement by our PM:

"We need no more foreign help to strengthen our nation by asking IMF to interfere but would like to help IMF by providing an AID if required "

Though the outcome of the meet was not in India's favour many of those "so-called respectable people" wrote it to be a path breaking success for India.

It is clearly visible in the link that its US who is leaning not India.

End Of Dollar Dominance

There is now an important new addition to the list of global currency enthusiast, the Chinese Central Bank. According to the Governor the world needs a common currency managed by International Monetary Fund(IMF).

Leaders of G20 are to meet in London to discuss on the Global Economy along with it they are to discuss the new issue of Global Currency.

As in my previous post(Petro-Dollar) I have emphasised on how the US got hand on the Currency business and how the strength is going down. The report has come somewhat true.

Thats why I usually say:

"Bloggers are never WRONG".

Dollar Dominance is likely to be under threat as world economic power gets disbursed.

According to experts setting an all together new currency wont be that easy. For this to happen, all the countries will have to converge to similar levels of public debt and inflation.

To jump-start a new global reserve currency, economists say, it would require someone effectively subsidizing the cost of bringing buyers and sellers together for the time it takes the currency to get the traction.

Benefits of a global currency would be independence of countries on one separate national currency, because as USA falls the currency may weaken in global market leading to the weakening of other nations(especially Developing) for no fault of theirs.

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G7 and G20 countries

G7 Countries

The G7 was an informal gathering of heads of state and governments of the world's most advanced economies (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States).

In the early stages, members of the G7 were accompanied at meetings by their foreign and finance ministers. In 1998, the British Presidency decided to separate the ministerial meetings from the original summit in order to keep the original concept of a small, informal gathering. In the same year, Russia joined what then became the G8. Since 2005, the G8 has been holding dialogues with the major emerging economies of Brazil, China, India, Mexico and South Africa.

G8 finance ministers meet once a year before the actual summit. However, finance ministers also meet in general three more times (early in the year, and at the margin of the spring and annual meetings of the international financial institutions), but in a G7 (instead of a G8) framework. . Since the introduction of the euro, the European Central Bank (ECB) and the President of the Eurogroup also attend. (Courtesy:Wikipedia)

The G7/8 deals with such issues as: global economic outlook and macroeconomic management, international trade, energy, climate change, and relations with developing countries.

G20 Countries

The G20 (Group of 20) is a group representing 19 of the world's largest economies plus the European Union that are strategically important and influential in the world economy. The G20 was formed as a new forum for cooperation and consultation on matters pertaining to the International Financial System (IFS).

The membership of the G20 comprises the finance ministers and central bank governors of the G7, 12 other key countries, and the European Union Presidency (if not a G7 member); the European Central Bank; the Managing Director of the International Monetary Fund; the Chairman of the IMFC; the President of the World Bank; and the Chairman of the Development Committee.

The G20 is an informal forum that promotes open and constructive discussion between industrial and emerging-market countries on key issues related to global economic stability.

The members of the G20 are the finance ministers and central bank governors of 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom and the United States of America. The European Union is also a member, represented by the rotating Council Presidency and the European Central Bank.