BUSAN, South Korea Following is the statement issued by the Group of 20 after a meeting of its finance ministers and central bank chiefs on June 4-5.
1. We, the G20 Finance Ministers and Central Bank Governors, met at a critical juncture to firmly secure the global recovery and address the economic challenges and risks.
2. The global economy continues to recover faster than anticipated, although at an uneven pace across countries and regions. However, the recent volatility in financial markets reminds us that significant challenges remain and underscores the importance of international cooperation. The G20's strong policy response to the crisis has played a pivotal role in restoring growth and we stand ready to safeguard recovery and strengthen prospects for growth and jobs. We welcome the determined actions taken by the European Union, the European Central Bank and the IMF. We will pursue well coordinated economic policies. The recent events highlight the importance of sustainable public finances and the need for our countries to put in place credible, growth-friendly measures, to deliver fiscal sustainability, differentiated for and tailored to national circumstances. Those countries with serious fiscal challenges need to accelerate the pace of consolidation. We welcome the recent announcements by some countries to reduce their deficits in 2010 and strengthen their fiscal frameworks and institutions. Within their capacity, countries will expand domestic sources of growth, while maintaining macroeconomic stability. This will help ensure ongoing recovery. In addition, structural reforms, development policies, particularly supporting the poorest countries, and ongoing efforts to refrain from raising trade and investment barriers and resist protectionist measures are required. Monetary policy will continue to be appropriate to achieve price stability and thereby contribute to the recovery.
3. The Framework for Strong, Sustainable and Balanced Growth is a key mechanism by which we will work together to meet the immediate challenges of supporting the global recovery and achieving our medium-term shared Framework objectives. In order to advance its implementation, we considered the alternative policy scenarios by the IMF, with input from the OECD, ILO and other international organizations, and the interim report by the World Bank, both prepared in accordance with our guidance provided in April. On the basis of these reports, we carried out a consultative mutual assessment process and developed a basket of policy options to achieve stronger, more sustainable and more balanced growth. We will submit these options for consideration by our Leaders at the June 2010 Toronto Summit. To continue successful progress of the Framework, we are refining the country-led, consultative mutual assessment process and the timetable for our work in the lead up to the Seoul Summit.
4. Building on progress to date, we affirmed our commitment to intensify our efforts and to accelerate financial repair and reform. Therefore, we:
- agreed further progress on financial repair is critical to global economic recovery. This requires greater transparency and further strengthening of banks' balance sheets and better corporate governance of financial firms.
- committed to reach agreement expeditiously on stronger capital and liquidity standards as the core of our reform agenda and in that regard fully support the work of the Basel Committee on Banking Supervision and call on them to propose internationally agreed rules to improve both the quantity and quality of bank capital and to discourage excessive leverage and risk taking by the November 2010 Seoul Summit. It is critical that our banking regulators develop capital and liquidity rules of sufficient rigor to allow our financial firms to withstand future downturns in the global financial system. As we agreed, these rules will be phased in as financial conditions improve and economic recovery is assured, with the aim of implementation by end-2012. We welcome the progress on the quantitative and macroeconomic impact studies which will inform the calibration and phasing in, respectively. We are committed to move together in a transparent and coordinated way on national implementation of the agreed rules. Implementation of these new rules should be complemented by strong supervision.
- emphasized the need to reduce moral hazard associated with systemically important financial institutions and reinforced our commitment to develop effective resolution tools and frameworks for all financial institutions on the basis of internationally agreed principles. We look forward to the FSB's interim report to the Toronto Summit.
- agreed the financial sector should make a fair and substantial contribution toward paying for any burdens associated with government interventions, where they occur, to repair the banking system or fund resolution. To that end, recognizing that there is a range of policy approaches, we agreed to develop principles reflecting the need to protect taxpayers, reduce risks from the financial system, protect the flow of credit in good times and bad, taking into account individual country's circumstances and options, and helping promote level playing field. The IMF will deliver their final report at the Toronto Summit.
- committed to accelerate the implementation of strong measures to improve transparency, regulation and supervision of hedge funds, credit rating agencies, compensation practices and OTC derivatives in an internationally consistent and non-discriminatory way. We called on the FSB to review national and regional implementation in these areas and promote global policy cohesion. We also committed to improve the functioning and transparency of commodities markets.
- expressed the importance we place in achieving a single set of high quality, global accounting standards and urged the International Accounting Standards Board and the Financial Accounting Standards Board to redouble their efforts to that end. We encouraged the International Accounting Standards Board to further improve involvement of stakeholders.