Presented by Jongryn Mo 2009. 4. 28

1. G20 and the Global Financial System Presented by Jongryn Mo 2009. 4. 28

2. Background on the G20 London Summit • The Agenda and Results of the London Summit • The Significance of the London Summit • The Prospects for G20 Summit

3. When did the G-20 begin? • The Asian currency crisis in 1997 • Calls for a new consultative body for financial market stability • G-7 finance ministers agreed to create G-20 in September 1999 • G-20 to represent both industrialized and emerging economies • The Group of Twenty (G-20) Finance Ministers and Central Bankers The first G-20 Meeting was held in December 1999

4. G-20 Achievements Crisis Prevention · Management (’99~’02) • Exchange rate system • External debt • Crisis prevention • Debt workouts • Aging society • Sustainable growth General Economic Issues (’03~’07) • Globalization • Economic integration Finance ministers, not heads of states Long-term issues, not current issues

5. The global spread of the financial crisis Why the G-20 Summit? G-20 G-14 G-7 +α? Advanced and emerging economies needed to coordinate G-13 Elevate the G-20 to the Summit Level → The First Summit met in Washington on November 15, 2008

6. Washington Summit (08.11.15) Shared Concern on Global Economic Crisis Joint policy response Financial Market reform Stronger IMF Macro Policy Coordination Anti- protectionism IMF Governance Reform First time advanced and emerging economies met to discuss joint responses - Adopted agendas such as action plan for financial market reform

7. London Summit (09.4.2) Overcome and Prevent Economic Crisis Stop Protectionism Strengthen Financial Regulation/ Supervision Macro Economic Policy Coordination Expand Development Support The Third Summit to meet in 2009 : Implementation

8. London Summit (09.4.2) • $ 5 trillion in government spending in 2009-10→ 4% increase in GDP expected • IMF to assess national policy measures Fiscal Stimulus Fighting Protection • Standstill reconfirmed, violations to be rectified • Reject financial protectionism • WTO publish quarterly lists of protectionist actions

9. London Summit (09.4.2) • Expanded assistance to developing countries: $1.1 trillion • IMF and development banks $850 billion • Trade finance $250 billion • Governance reform at IMF and development banks Development Support Financial regulation/ supervision • Expand and rename FSFto FSB • Financial institutions and products with system risk • List and regulate credit rating agencies • Sanctions against non-cooperative jurisdictions

10. TheG-20 emerges as the central forum • Achieved concrete results beyond rhetoric • The lessons of the G-66 summit in 1933 • G-20 showed it could replaceG-7 as the central forum • G-20 to review and approve FSB discussion results • FSF·BCBS membership expanded, FSFconverted into FSB • Sanctions against non-cooperative jurisdictions • The third summit to be held during 2009

11. About London Summit • “They managed to get more than I expected” – George Soros • “a very productive summit that will be a turning point in our pursuit of global economic recovery…… The London Summit was historic because of the size and the scope of the challenges that we face, and because of the timelines and magnitude of our response” – Barack Obama • “This is the day that the world came together, to fight back against the global recession. Not with wordsbut a plan for global recovery and for reform and with a clear timetable” – Gordon Brown

12. About London Summit • “I think I can say that in an important conference we have found a very good, almost historic compromise in a unique crisis. This time the world does not reactas in the 30s” - Angela Merkel • “I think a new world order is emerging with the foundationof a new progressive era of international co-operation”- Gordon Brown • “ The real historic significance of this moment may be the historic shift it marks – away from Western dominance to something bigger and more global”– BBC

13. Strengthening financial regulations and supervision • Agreed to strengthen financial regulations for crisis prevention • But the importance of conditions and economic dynamism is to be recognized • Prudential regulations to come after financial market stability is restored • Emphasize both strong regulations and open trade and investment regimes

14. Strengthening financial regulations and supervision • “Since Bretton Woods, the world has been living on a financial model, the Anglo-Saxon model – it’s not my place to criticise it, it has its advantages – clearly,today, a page has been turned” – Nicolas Sarkozy • “The regulators are now beginning for the first timeto cast an eye over financial remuneration. Global regulation is what is required given the global nature of the financial system” – Kevin Rudd

15. A global financial regulatory body? FSB (FinancialStability Board) FSF G-7 Swiss, Hong Kong Global standards and regulations G-20 Swiss, HK Spain·EC Global standards/ regulations & New funding→ Development support Stronger monitoring/ early warning Business cycle compatibilityMultinational financial institutions Early warnings

16. The Third Summit • Check the implementation of the London agreements • Reformation of financial regulations • Strengthening of FSB and IMF • Current economic issues at the time of the meeting • The second meeting theme: restoring confidence in financial markets

17. The Future of the G-20 System • Inclusiveness, Representation • G-20 = G-7 + Emerging economies+ International Financial Organizations 2/3 of World's Populations 79% of Global GDP 79% 3/2

18. The Future of the G-20 System • Efficiency • Efficiency = Policy formulation + Policy implementation • Successful summits: London after the Washington Summit EMEs’ Economic Weight in G20 Population AdvancedCountries EMEs * Source : Goldman Sachs

19. Thank You!