For the Record
We, the Leaders of the Group of Twenty, met in London on 2 April 2009.
•
We face the greatest challenge (see huge smiles showing how they want to conquer this challenge) to the world economy in modern times; a
crisis which has deepened since we last met, which affects the lives of
women, men, and children in every country, and which all countries must
join together to resolve. A global crisis requires a global solution.
•
We start from the belief that prosperity is indivisible; that growth,
to be sustained, has to be shared; and that our global plan for
recovery must have at its heart the needs and jobs of hard-working
families, not just in developed countries but in emerging markets and
the poorest countries of the world too; and must reflect the interests,
not just of today’s population, but of future generations too. We
believe that the only sure foundation for sustainable globalisation and
rising prosperity for all is an open world economy based on market
principles, effective regulation, and strong global institutions.
• We have today therefore pledged to do whatever is necessary to:
* restore confidence, growth, and jobs;
* repair the financial system to restore lending;
* strengthen financial regulation to rebuild trust;
* fund and reform our international financial institutions to overcome this crisis and prevent future ones;
* promote global trade and investment and reject protectionism, to underpin prosperity; and
* build an inclusive, green, and sustainable recovery.
By
acting together to fulfill these pledges we will bring the world
economy out of recession and prevent a crisis like this from recurring
in the future.
• The agreements we have reached today, to treble
resources available to the IMF to $750 billion, to support a new SDR
[IMF special drawing rights] allocation of $250 billion, to support at
least $100 billion of additional lending by the MDBs [Multilateral
Development Banks], to ensure $250 billion of support for trade
finance, and to use the additional resources from agreed IMF gold sales
for concessional finance for the poorest countries, constitute an
additional $1.1 trillion programme of support to restore credit, growth
and jobs in the world economy. Together with the measures we have each
taken nationally, this constitutes a global plan for recovery on an
unprecedented scale.
Restoring growth and jobs
• We
are undertaking an unprecedented and concerted fiscal expansion, which
will save or create millions of jobs which would otherwise have been
destroyed, and that will, by the end of next year, amount to $5
trillion, raise output by 4 per cent, and accelerate the transition to
a green economy. We are committed to deliver the scale of sustained
fiscal effort necessary to restore growth.
• Our central banks have
also taken exceptional action. Interest rates have been cut
aggressively in most countries, and our central banks have pledged to
maintain expansionary policies for as long as needed and to use the
full range of monetary policy instruments, including unconventional
instruments, consistent with price stability.
• Our actions to
restore growth cannot be effective until we restore domestic lending
and international capital flows. We have provided significant and
comprehensive support to our banking systems to provide liquidity,
recapitalise financial institutions, and address decisively the problem
of impaired assets. We are committed to take all necessary actions to
restore the normal flow of credit through the financial system and
ensure the soundness of systemically important institutions,
implementing our policies in line with the agreed G20 framework for
restoring lending and repairing the financial sector.
• Taken
together, these actions will constitute the largest fiscal and monetary
stimulus and the most comprehensive support programme for the financial
sector in modern times. Acting together strengthens the impact and the
exceptional policy actions announced so far must be implemented without
delay. Today, we have further agreed over $1 trillion of additional
resources for the world economy through our international financial
institutions and trade finance.
• Last month the IMF estimated that
world growth in real terms would resume and rise to over 2 percent by
the end of 2010. We are confident that the actions we have agreed
today, and our unshakeable commitment to work together to restore
growth and jobs, while preserving long-term fiscal sustainability, will
accelerate the return to trend growth. We commit today to taking
whatever action is necessary to secure that outcome, and we call on the
IMF to assess regularly the actions taken and the global actions
required.
• We are resolved to ensure long-term fiscal
sustainability and price stability and will put in place credible exit
strategies from the measures that need to be taken now to support the
financial sector and restore global demand. We are convinced that by
implementing our agreed policies we will limit the longer-term costs to
our economies, thereby reducing the scale of the fiscal consolidation
necessary over the longer term.
• We will conduct all our economic
policies cooperatively and responsibly with regard to the impact on
other countries and will refrain from competitive devaluation of our
currencies and promote a stable and well-functioning international
monetary system. We will support, now and in the future, to candid,
even-handed, and independent IMF surveillance of our economies and
financial sectors, of the impact of our policies on others, and of
risks facing the global economy.
Strengthening financial supervision and regulation
•
Major failures in the financial sector and in financial regulation and
supervision were fundamental causes of the crisis. Confidence will not
be restored until we rebuild trust in our financial system. We will
take action to build a stronger, more globally consistent, supervisory
and regulatory framework for the future financial sector, which will
support sustainable global growth and serve the needs of business and
citizens.
• We each agree to ensure our domestic regulatory systems
are strong. But we also agree to establish the much greater consistency
and systematic cooperation between countries, and the framework of
internationally agreed high standards, that a global financial system
requires. Strengthened regulation and supervision must promote
propriety, integrity and transparency; guard against risk across the
financial system; dampen rather than amplify the financial and economic
cycle; reduce reliance on inappropriately risky sources of financing;
and discourage excessive risk-taking. Regulators and supervisors must
protect consumers and investors, support market discipline, avoid
adverse impacts on other countries, reduce the scope for regulatory
arbitrage, support competition and dynamism, and keep pace with
innovation in the marketplace.
• To this end we are implementing the
Action Plan agreed at our last meeting, as set out in the attached
progress report. We have today also issued a Declaration, Strengthening
the Financial System. In particular we agree:
* to establish a new
Financial Stability Board (FSB) with a strengthened mandate, as a
successor to the Financial Stability Forum (FSF), including all G20
countries, FSF members, Spain, and the European Commission;
* that
the FSB should collaborate with the IMF to provide early warning of
macroeconomic and financial risks and the actions needed to address
them;
* to reshape our regulatory systems so that our authorities are able to identify and take account of macro-prudential risks;
*
to extend regulation and oversight to all systemically important
financial institutions, instruments and markets. This will include, for
the first time, systemically important hedge funds;
* to endorse and
implement the FSF’s tough new principles on pay and compensation and to
support sustainable compensation schemes and the corporate social
responsibility of all firms;
* to take action, once recovery is
assured, to improve the quality, quantity, and international
consistency of capital in the banking system. In future, regulation
must prevent excessive leverage and require buffers of resources to be
built up in good times;
* to take action against non-cooperative
jurisdictions, including tax havens. We stand ready to deploy sanctions
to protect our public finances and financial systems. The era of
banking secrecy is over. We note that the OECD has today published a
list of countries assessed by the Global Forum against the
international standard for exchange of tax information;
* to call on
the accounting standard setters to work urgently with supervisors and
regulators to improve standards on valuation and provisioning and
achieve a single set of high-quality global accounting standards; and
*
to extend regulatory oversight and registration to Credit Rating
Agencies to ensure they meet the international code of good practice,
particularly to prevent unacceptable conflicts of interest.
• We
instruct our Finance Ministers to complete the implementation of these
decisions in line with the timetable set out in the Action Plan. We
have asked the FSB and the IMF to monitor progress, working with the
Financial Action Taskforce and other relevant bodies, and to provide a
report to the next meeting of our Finance Ministers in Scotland in
November.
Strengthening our global financial institutions
•
Emerging markets and developing countries, which have been the engine
of recent world growth, are also now facing challenges which are adding
to the current downturn in the global economy. It is imperative for
global confidence and economic recovery that capital continues to flow
to them. This will require a substantial strengthening of the
international financial institutions, particularly the IMF. We have
therefore agreed today to make available an additional $850 billion of
resources through the global financial institutions to support growth
in emerging market and developing countries by helping to finance
counter-cyclical spending, bank recapitalisation, infrastructure, trade
finance, balance of payments support, debt rollover, and social
support. To this end:
* we have agreed to increase the resources
available to the IMF through immediate financing from members of $250
billion, subsequently incorporated into an expanded and more flexible
New Arrangements to Borrow, increased by up to $500 billion, and to
consider market borrowing if necessary; and
* we support a
substantial increase in lending of at least $100 billion by the
Multilateral Development Banks (MDBs), including to low income
countries, and ensure that all MDBs, including have the appropriate
capital.
• It is essential that these resources can be used
effectively and flexibly to support growth. We welcome in this respect
the progress made by the IMF with its new Flexible Credit Line (FCL)
and its reformed lending and conditionality framework which will enable
the IMF to ensure that its facilities address effectively the
underlying causes of countries’ balance of payments financing needs,
particularly the withdrawal of external capital flows to the banking
and corporate sectors. We support Mexico ‘s decision to seek an FCL
arrangement.