Financial Facts

Leaders of the G-20 have been unusually busy this year. The financial meltdown has everything to do with it. First was in Washington in November 2008 – crisis meeting, then London in April 2009 – reviewing actions and recently in Pittsburgh in September – planning towards avoiding a future crisis.

Key decisions

At Pittsburgh, the leaders agreed that their entire membership to serve as the Governing Board of Directors on matters of the global economy – a clear departure from the past twenty years when only the US, Japan, Germany, France, Britain, Canada, Italy and Russia acted as the Board members.

The G-20 now includes key promising economies such as China, Brazil and India.

The leaders also made a strong commitment to keep up the momentum for financial reforms by approving the broad proposals to address the massive instability in the economies of nations such as the huge trade surpluses in China and the extraordinary record of huge budget deficits in the United States.

The International Monetary Fund will play a monitoring role in implementation.

The proposal does not specify definite timelines and targets for trade and budget stabilities.

The G-20 countries agreed to restrict bankers on rewards and benefits by the close of the year. This would mean setting different benchmarks in each country to be overseen by the international Financial Stability Board, made of financial regulators and finance ministers drawn from all the G-20 countries.

China will now have more voting rights in the IMF and the World Bank – courtesy of backing from the US over the reservations of European nations.

One thing is clear, global crisis calls for global action and this either unites countries or divides them. But when managed properly that is in a principle of win-a-win-win, a lot can be achieved. At least, the financial crisis in Europe seems to have brought the worlds powerful nations together in a more constructive manner since the war in Iraq and has even helped ease out cold tensions between the US and most of Europe.