The G-20 April 2nd Summit in London acknowledged the group's interdependence and moved toward greater cooperation now essential to reforming global finance. The G-20 endorsed the goal of building a resilient, sustainable and green economy. "We will make the transition towards clean, innovative, resource-efficient, low-carbon technologies and infrastructure." The G-20 also reaffirmed their commitment to address climate change and to reach agreement at the December 2009 UN Conference on Climate Change in Copenhagen.
Commitments underway by G-20 countries of $5 trillion are expected to raise global output by 4% and accelerate the transition to a green economy.
Fundamental reforms were not addressed, including the need to re-design debt-based money and banking or to create a new global reserve currency, already proposed by China, Russia, India, Brazil and other G-20 members so as to relieve imbalances and excessive pressure on the US dollar.
More immediate reform of the voting representation on the boards of the World Bank and the IMF are a step forward, together with an additional $750 billion: with $250 billion for a new issuance of Special Drawing Rights (SDRs); $250 billion to support trade finance; $100 billion of additional lending to developing countries, as well as an additional $1.1 trillion from IMF gold sales for concessional finance to the poorest countries.
The heart of the G-20 agreements is to move beyond the "Anglo-Saxon" economics typified by the now-rejected "Washington Consensus" model. Many sensible new rules were promulgated to regulate and oversee global financial firms, including hedge funds, new principles for executive pay, accounting rules, credit rating agencies, excessive leverage and restraining excessive risk taking. Rules for tax and regulatory arbitrage are to be tightened and tax-havens "named and shamed." However, the hypocrisy reported by Australia's Griffith University professor Jason Sharman must be addressed: that the US states of Nevada, Delaware and Wyoming, as well as some OECD member countries, must be included in the "shaming."
No mention was made on correcting GDP as proposed by the European Parliament to include statistics on education, health, environment or poverty gaps; nor on the need for incorporating such ESG factors in company balance sheets and reporting.
My most recent editorial for Interpress Service is "Democratizing Finance."