THIS is the meeting to watch...not the puppet BS in Pittsburg Pa...:
FACTBOX-What is likely to emerge from London G20 meeting
Wed Sep 2, 2009 7:21am EDT
LONDON, Sept 2 (Reuters) - Finance ministers and central bankers from the Group of 20 developed and developing economies meet in London this week to assess how far the world economy and banking system is recovering from two years of crisis.
Below are the key market themes and what to expect from the meeting.
CURRENCIES
G7 sources say there is unlikely to be any mention of the future role of the dollar, yuan revaluation or a new global reserve currency in the main talks in London, despite a broad recognition of the need to tackle imbalances between surplus and deficit nations.
While some such as France, China and Russia want to discuss currencies, others such as Britain and the United States think financial market sentiment is still too fragile for such debate.
ECONOMY/EXIT STRATEGIES
The phrase to look for in the communique will be that the G20 will keep policy expansionary or accommodative for as long as it takes to safeguard recovery but will prepare credible, co-ordinated and smooth exit strategies for the right moment.
A G7 source has told Reuters the language on this is likely to be little changed from the April G20 meetings.
European Union finance ministers are likely to tell the G20 that plans to withdraw fiscal stimulus should be prepared, but that it is too early to implement them, EU sources say. [ID:nBFA002973]
They may also seek international coordination in the gradual withdrawal of global fiscal stimuli, while British Prime Minister Gordon Brown has been pushing for long-term cooperation to ensure a return to sustained growth. [ID:nL1606967]
Despite calls from Germany to reduce the global stimulus [ID:nLV212674], most policymakers are cautious for two reasons:
-- There are concerns among smaller economies, still shrinking larger economies such as Britain, and even those such as Japan that returned to growth in the second quarter, that any recovery could reverse. Most admit the world's banking system is still fragile and could need further support.
-- For those wanting to use the current crisis to make sweeping changes to the financial system such as France, admitting the global recession is over too early could dampen the appetite for reform.
FUTURE GROWTH
A key area for discussion in London and Pittsburgh is where future economic growth will come from, given a chastised financial sector in the West and a weaker U.S. consumer.
China has made positive noises about boosting domestic demand to take up some of the slack but structural changes could be needed in export dependent countries such as Germany and Japan to ensure future prosperity.
Expect the discussion to focus on new technologies, green innovation and higher education.
The United States, which hosts the G20 summit in Pittsburgh later this month, is keen to showcase a former steel-making city now finding success in areas such as health and learning.
FINANCIAL REGULATION
G7 sources say there is little chance of a big breakthrough on the mass of regulatory changes that have been suggested to fix the world's financial system since the credit crisis broke.
While Germany and France are keen to act while the appetite for change is strong, the United States, Japan and Britain are wary of any drastic measures that may stifle future growth in their crucial financial sectors.
Some governments have also resisted giving powers to over-arching regulators, wanting to keep national supervisors at the centre of any future regime.
Expect London to be a stock-taking exercise on pledges made in April, resulting in broad support for changes to the way financial sector wages, hedge funds, derivative trading and accounting are managed.
Credit ratings agencies, banks' capital and liquidity buffers and general supervision will also feature in discussions though there are unlikely to be any major new initiatives.
There have been discussions on dynamic provisioning -- banks building up capital in good times to help in the bad times -- at an international level but they have yet to be concluded.
BANKERS' BONUSES
Politicians across the world have heavily criticised banks for their role in the financial crisis and want bonus regimes to be improved to avoid reckless behaviour in the future.
Expect lots of sabre rattling and a pledge for a structural change to financial sector remuneration where pay is dependent on sustainable profitability.
The widespread adoption of specialised Tobin-style taxes on the financial sector or the French ideas for pay caps and taxes on bonuses are unlikely though. [ID:nLQ42626]
MORE MONEY FOR IMF
Global leaders pledged to triple the International Monetary Fund's capacity to help struggling economies to $750 billion at the April London summit but some have been slow to fulfil that pledge.
Policymakers will be concerned that global recovery will reduce the appetite to come good on April's promise, although sources say the European Union could up its contribution to $175 billion to meet its pledge [ID:nL1727878].
REPRESENTATION IN GLOBAL BODIES
The drive to make bodies such as the IMF and World Bank more representative of the interests of fast emerging economies such as China and India has accelerated this year.
Markets will be looking for details on how changes to voting power will be managed and when they may come.
ENERGY MARKET SPECULATION
The United States, along with regulators across the world, are working to tighten trading in areas such as oil and natural gas markets to reduce the influence market speculators have on the everyday cost of fuel.
Critics say such action could hurt market confidence and hit tax income for some nations if prices plunged. [ID:nN27310874]
Policymakers from large oil consumers say a volatile oil price is bad for the world economy and have been discussing how to improve the transparency of the market with oil producers.
However, little progress has been made and London is unlikely to produce a solution.
CLIMATE CHANGE
London is a key stage towards agreeing a new global climate change deal in Copenhagen in December, but policymakers across the world admit there is a long way to go in finding a way to break through the deadlock between rich and poor nations.
Developing economies, under pressure from richer countries to act, want financial help to offset the costs.
Given the need for urgent progress, London could discuss climate finance and how the necessary billions of dollars a year will be sourced and managed to help poorer countries curb emissions and cope with droughts and heatwaves.
Expect the pressure for a breakthrough to increase when the discussion moves to Pittsburgh.
FARM AID
The G8 group of industrialised nations have pledged $20 billion to help poor nations feed themselves through improving agriculture.
There may be some preliminary discussion in London on how those funds might be dispersed, with the World Bank seen as one possible supervisor.
(Additional reporting by Sumeet Desai, Huw Jones, Lesley Wroughton and Alister Doyle; Editing by Ruth Pitchford
FACTBOX-What is likely to emerge from London G20 meeting
Wed Sep 2, 2009 7:21am EDT
LONDON, Sept 2 (Reuters) - Finance ministers and central bankers from the Group of 20 developed and developing economies meet in London this week to assess how far the world economy and banking system is recovering from two years of crisis.
Below are the key market themes and what to expect from the meeting.
CURRENCIES
G7 sources say there is unlikely to be any mention of the future role of the dollar, yuan revaluation or a new global reserve currency in the main talks in London, despite a broad recognition of the need to tackle imbalances between surplus and deficit nations.
While some such as France, China and Russia want to discuss currencies, others such as Britain and the United States think financial market sentiment is still too fragile for such debate.
ECONOMY/EXIT STRATEGIES
The phrase to look for in the communique will be that the G20 will keep policy expansionary or accommodative for as long as it takes to safeguard recovery but will prepare credible, co-ordinated and smooth exit strategies for the right moment.
A G7 source has told Reuters the language on this is likely to be little changed from the April G20 meetings.
European Union finance ministers are likely to tell the G20 that plans to withdraw fiscal stimulus should be prepared, but that it is too early to implement them, EU sources say. [ID:nBFA002973]
They may also seek international coordination in the gradual withdrawal of global fiscal stimuli, while British Prime Minister Gordon Brown has been pushing for long-term cooperation to ensure a return to sustained growth. [ID:nL1606967]
Despite calls from Germany to reduce the global stimulus [ID:nLV212674], most policymakers are cautious for two reasons:
-- There are concerns among smaller economies, still shrinking larger economies such as Britain, and even those such as Japan that returned to growth in the second quarter, that any recovery could reverse. Most admit the world's banking system is still fragile and could need further support.
-- For those wanting to use the current crisis to make sweeping changes to the financial system such as France, admitting the global recession is over too early could dampen the appetite for reform.
FUTURE GROWTH
A key area for discussion in London and Pittsburgh is where future economic growth will come from, given a chastised financial sector in the West and a weaker U.S. consumer.
China has made positive noises about boosting domestic demand to take up some of the slack but structural changes could be needed in export dependent countries such as Germany and Japan to ensure future prosperity.
Expect the discussion to focus on new technologies, green innovation and higher education.
The United States, which hosts the G20 summit in Pittsburgh later this month, is keen to showcase a former steel-making city now finding success in areas such as health and learning.
FINANCIAL REGULATION
G7 sources say there is little chance of a big breakthrough on the mass of regulatory changes that have been suggested to fix the world's financial system since the credit crisis broke.
While Germany and France are keen to act while the appetite for change is strong, the United States, Japan and Britain are wary of any drastic measures that may stifle future growth in their crucial financial sectors.
Some governments have also resisted giving powers to over-arching regulators, wanting to keep national supervisors at the centre of any future regime.
Expect London to be a stock-taking exercise on pledges made in April, resulting in broad support for changes to the way financial sector wages, hedge funds, derivative trading and accounting are managed.
Credit ratings agencies, banks' capital and liquidity buffers and general supervision will also feature in discussions though there are unlikely to be any major new initiatives.
There have been discussions on dynamic provisioning -- banks building up capital in good times to help in the bad times -- at an international level but they have yet to be concluded.
BANKERS' BONUSES
Politicians across the world have heavily criticised banks for their role in the financial crisis and want bonus regimes to be improved to avoid reckless behaviour in the future.
Expect lots of sabre rattling and a pledge for a structural change to financial sector remuneration where pay is dependent on sustainable profitability.
The widespread adoption of specialised Tobin-style taxes on the financial sector or the French ideas for pay caps and taxes on bonuses are unlikely though. [ID:nLQ42626]
MORE MONEY FOR IMF
Global leaders pledged to triple the International Monetary Fund's capacity to help struggling economies to $750 billion at the April London summit but some have been slow to fulfil that pledge.
Policymakers will be concerned that global recovery will reduce the appetite to come good on April's promise, although sources say the European Union could up its contribution to $175 billion to meet its pledge [ID:nL1727878].
REPRESENTATION IN GLOBAL BODIES
The drive to make bodies such as the IMF and World Bank more representative of the interests of fast emerging economies such as China and India has accelerated this year.
Markets will be looking for details on how changes to voting power will be managed and when they may come.
ENERGY MARKET SPECULATION
The United States, along with regulators across the world, are working to tighten trading in areas such as oil and natural gas markets to reduce the influence market speculators have on the everyday cost of fuel.
Critics say such action could hurt market confidence and hit tax income for some nations if prices plunged. [ID:nN27310874]
Policymakers from large oil consumers say a volatile oil price is bad for the world economy and have been discussing how to improve the transparency of the market with oil producers.
However, little progress has been made and London is unlikely to produce a solution.
CLIMATE CHANGE
London is a key stage towards agreeing a new global climate change deal in Copenhagen in December, but policymakers across the world admit there is a long way to go in finding a way to break through the deadlock between rich and poor nations.
Developing economies, under pressure from richer countries to act, want financial help to offset the costs.
Given the need for urgent progress, London could discuss climate finance and how the necessary billions of dollars a year will be sourced and managed to help poorer countries curb emissions and cope with droughts and heatwaves.
Expect the pressure for a breakthrough to increase when the discussion moves to Pittsburgh.
FARM AID
The G8 group of industrialised nations have pledged $20 billion to help poor nations feed themselves through improving agriculture.
There may be some preliminary discussion in London on how those funds might be dispersed, with the World Bank seen as one possible supervisor.
(Additional reporting by Sumeet Desai, Huw Jones, Lesley Wroughton and Alister Doyle; Editing by Ruth Pitchford