ET in the classroom: G20 in fire-fighting mode

G20 IN FIRE-FIGHTING MODE

The finance ministers and central bank chiefs of G20 countries will meet at Busan, South Korea through Friday and Saturday amid growing fears of an-other round of economic crisis. The meeting will set the agenda for the G20 summit later this month in Canada.

BACKDROP

- Sovereign debt crisis in the Europe threatens another round of economic slow-down.
- Stock markets across the world have crashed, Dow down almost 8% in May.
- The euro has depreciated sharply, raising questions over the currency’s viability. The currency does not offer the individual country flexibility to take cor-rective action.
- Overhanging issue of the over-valued Chinese currency yuan.
- Renewed tensions between North and South Koreas.

ON THE MENU

Reform of the global financial system to prevent another crisis.

Bank levy: Making banks pay for future bailouts; the US and the EU in favour, but countries such as Canada and Australia oppose the plan.

Bank Capital: New capital standards for banks as the financial crisis has ex-posed the current ones.
Capital Flow: Regulations to cushion capital flows could be discussed.

European debt crisis: Many of the indebted countries face tough time and pose risk for the global economy. A reaffirmation of support to troubled countries to calm the markets.

THE G20

Founded in 1999, G-20 includes Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, Republic of Korea, Turkey, the UK and the US.

The grouping gained prominence after the shock of 2008, when it spearheaded efforts to contain tackle the crisis. It largely replaced G-7 as the key actor in the world economy.