Finance ministers and central bankers from the Group of 20 nations met last week to prepare for the coming G20 summit and agreed to “take whatever action is necessary until growth is restored.” Although a division surfaced among the participating nations, the commitment to efforts to attain recovery of the global economy is significant.

The G20 nations, which include the G7 developed countries and emerging economies like Russia, Brazil, China and India, account for more than 80 percent of the world economy. It is hoped that they will strengthen their unity and work out clearly defined actions in the G20 summit to be held in London on April 2.

Economic stimulus measures were a major point of last week’s meeting. The participants agreed on the importance of fiscal spending as a means of ensuring economic growth and creating jobs. They agreed that “acting together” in implementing such measures “strengthens the impact.”

Although the United States called on the participating nations to adopt fiscal spending amounting to 2 percent of their gross domestic product, European nations were reluctant to adopt a numerical target. Thus the communique failed to include such a target.

Reasonably, the participants agreed on the need to stabilize the financial system, which is the prerequisite for effective economic stimulus measures, through such means as bank recapitalization and dealing with bad assets. They agreed that their key priority is “to restore lending by tackling, where needed, problems in the financial system head on.” They also made it clear that the G20 central banks will pursue expansionary policies “as long as needed,” even using unconventional policy tools for quantitative easing.

It is hoped that the G20 summit will come up with effective medium-term actions, which will include “regulation and oversight” of “systemically important financial institutions, markets and instruments.”

The G20 nations committed themselves to “fight all forms of protectionism.” It will be especially important that nations that are not members of the World Trade Organization are not tempted by protectionism.

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