The G20 finance ministers and central bankers are trying to reach a consensus on how far the world economy and banking system has recovered from two years of crisis.
Topping their agenda are exit strategies for when the economic crisis is over. The US and most European finance ministers have said it is too early to withdraw stimulus measures and when the time comes, support measures should be withdrawn in an orderly and coordinated way. A key area for discussion in London, and when the G20 leaders meet in Pittsburgh later this month, is where future economic growth will come from, given the damage done to the West’s financial sector and the weakened state of consumption in the US. Banker’s bonuses are a big hot button issue, but it is by no means clear that an agreement can be reached on changes to avoid bonus motivated reckless behaviour in the future. French proposals for pay caps and taxes on bonuses are seen as unlikely to get broad support. With regard to tax havens where the rich hide their money, the finance ministers are likely to delay a decision for tough sanctions on prominent so called offshore centres like Switzerland. Recently several countries have committed to cooperate more on tax evasion. The International Monetary Fund is central to the plans to help struggling economies. The minister are still rounding up the funds promised to the IMF at the London summit back in April. The European Union has recently increased its IMF contribution. London is a key stage towards agreeing a new global climate change deal but policymakers admit they are still a long way off agreeing where the money will come from.