G20 takes charge of world economy
The Group of 20 will become the forum for global economic management, giving rising powers such as China more clout, and roll out tougher rules on bank capital by the end of 2012, a draft communique said on Friday.
Ensuring and sustaining economic recovery topped the agenda at the two-day Pittsburgh summit of the world’s richest nations and emerging powers such as China, India and Brazil.
The G20 countries, which account for 90 percent of the world’s output, vowed to keep emergency economic support in place until a recovery was secured, according to the draft communique.
Suggestions that any exit strategies would still be a way off caused the dollar to fall to a 7-1/2-month low beneath the key 90-yen level on Friday.
Investors had worried signs might emerge from the summit that countries were getting ready to start raising interest rates or reversing other massive economic stimulus measures, but U.S. stocks were down slightly on Friday.
U.S. President Barack Obama’s first G20 summit as host was testing his ability to juggle domestic and foreign policy.
Disclosure of a second Iranian uranium enrichment plant gave Obama, with the leaders of Britain and France at his side, an opportunity to press for united action against Tehran over its disputed nuclear program.
The G20 agreed to rein in financial industry excesses that triggered the credit crisis two years ago.
Tighter rules on how much capital banks must have to absorb losses should be ready by the end of 2010 and will be phased in during the following two years, the draft said.
The document also tackled the contentious issue of bankers’ pay schemes, blamed for fostering a high-risk corporate culture that led to heavy losses and taxpayer-funded bailouts.
It suggested linking pay to “long-term value creation, not excessive risk-taking.”
The draft did not mention direct caps on pay, as proposed by some European leaders. French officials said the summit had not reached a final accord on executive pay.
The document said the G20 would try to secure a deal next year in long-running world trade talks. Similar pledges have been made at a number of international gatherings, so far without result.
A final communique will be issued when the leaders wind up their meeting late on Friday and is subject to change.
TACKLING IMBALANCES
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