G-20 leaders move to tighten regulation
As much as $500 billion will also be channeled into the International Monetary Fund (IMF).
LONDON – Leaders at the G-20 summit have reached agreement on a package which is being greeted widely as a landmark move to banish the era of "light-touch" financial regulation.Skip to next paragraph
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An additional $500 billion will be channeled into the International Monetary Fund (IMF) in a bid to alleviate the impact of the global recession on struggling economies. Also pumped into the world economy will be $250 billion in IMF Special Drawing Rights and $250 billion to boost trade.
However, there was early concern that the lack of new money for a major international stimulus package could spell trouble down the line.
British Prime Minister Gordon Brown said in a publicly broadcast session that the leaders had agreed to a draft communiqué in early morning discussions that would strengthen international institutions, such as the IMF, and send out a clear message against protectionism and the erection of trade barriers.
Analysts in London said that the initial details coming out of the summit would ensure that it would not be regarded as a failure.
But Robin Niblett, the director of Chatham House, Britain’s leading international affairs institute, warned that there could be problems in the future if the leaders of Germany and France, Chancellor Angela Merkel and President Nicolas Sarkozy, went home and portrayed the absence of a new international stimulus package as a victory.
“There will be difficulties if the Germans and French start crowing over this because the US has been deeply concerned that other countries are relying too much on it to pull them out of the crisis,” said Dr. Niblett, who cautioned that such a scenario could lead to protectionism. “The problem is that the Americans might then say, 'well ok, we are going to look after out own interests.'”
“Overall though, this summit is going to be regarded as a success. One of its biggest achievements will be putting an end to the type of light touch regulation that was advocated in the past by people like Gordon Brown. That is a key global agreement, but the most important thing that this summit has done is show that the G-20 can still speak with one voice.”