G20 Summit Highlights - Financial Institutional Reforms

Introduction

The 11 th two day G-20 summit was held on September 4 and 5, 2016 at Hangzhou in China. There were a lot of expectations from the 11th G-20 summit conducted amidst a lackluster global economy.

Background

  • G-20 is one of the most powerful groupings in the world and founded in 1999
  • G-20 summit was launched 8 years ago in Washington D.C to overcome the 2008 financial crisis
  • Global economy was revived from the 2008 economic crisis and restored by G-20
  • G-20 aims at addressing the international financial issues and member cooperation
  • ‘Blue Print on Innovative Growth’ was the theme of the first G-20 summit
  • G-20 constitutes the 20 major world economies
  • G-20 contributes 80 percent of the trade volume of the entire world
  • G-20 contributes 90 percent of the total GDP of the world
  • 11 G-20 Summits conducted so far
  • 1st G-20 summit chaired by USA
  • 10th G-20 summit chaired by Turkey
  • 12th G-20 summit is to be chaired by Germany
  • India is expected to hold the G-20 Chair in 2018. To be decided between Argentina and India in due course of time

Hangzhou G-20 Summit

  • Mr. Xi JinPing, President of China chaired 11 th G-20 Summit and delivered the opening speech
  • Theme is ‘Towards an innovative, invigorated, interconnected and inclusive world economy’
  • Reinforce macro policy coordination and communication
  • Enhance global finance and economic governance for overall economic growth of the world
  • Revitalize international investment and trade to build an open economy
  • Promotion of interconnected and inclusive development
  • Action plan to achieve 2030 agenda for sustainable development
  • Support in the industrialization process of the African nations and least developed countries
  • Joint efforts to bring back the world economy to a strong position
  • Hangzhou summit has transformed G-20 from a crisis response grouping to a long term governance mechanism
  • Prime Minister Mr. Narendra Modi attended G-20 on behalf of India

Fourth G-20 Finance Ministers and Central bank Governors Meet

  • This meet was conducted in Washington D.C on 6 th October 2016 as a prelude to G-20 summit
  • This is the second meet of this year and last meet under the leadership of China
  • Co chaired by Mr. Lou Jiwei, Chinese Finance Minister and Mr. Zhou Xiaochuan, Governor of PRC
  • Finance Minister Mr. Arun Jaitley attended on behalf of India

Financial Institutional reforms

  • Agreement reached to continue quota of international financial institutions and voting right reforms for the development of emerging nations
  • Quota reforms to be administered by International Monetary Fund (IMF)
  • Voting power on share holding basis to be undertaken by World Bank
  • Regional and international financial safety net to be ensured through a joint drill of risk response
  • Deepen cooperation in combating tax evasion among world nations
  • China is to establish an international tax policy research center
  • Measures and multilateral agreements made to boost cross border trade and investment to boost economy of the world
  • The G-20 members have agreed to support the multi lateral trading system
  • Released the first ever guiding principles for global investment policy making
  • Greater significance given to multilateral rules that govern the international investment
  • G-20 leaders formulated high level principles on individuals responsible for financial corruption and corrupt officials will be punished severely
  • An anti corruption action plan will be formulated for 2017-2018
  • Strong emphasis made on asset recovery from willful defaulters
  • Review of fugitive repatriation and asset recovery made

Areas of Concern

  • G-20 aims at cooperation among nations for success
  • The recent tussle between USA, Russia and China in trade matters and difference of opinion on international problems seems an area of concern
  •  China’s open rivalry with India in stopping her entry into NSG and supporting Pakistan is a worrying factor
  • Despite differences, World nations must cooperate together in implementing the action plans of the 11 th G-20 Summit for the overall economic development of the world.

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