The 2011/11/28 at 09:02
While the European crisis-exit plan, negotiated on 27 October, was supposed to be presented to the G20 in Cannes on 3 and 4 November 2011, the announcement, on Monday 31 October, of the Greek referendum, threw a spanner in the works. The poor market reaction was nevertheless cancelled out thanks to Franco-German efforts to persuade the Greek Prime Minister George Papandreou to call off his project, and Italy’s commitment to put its public finances back in order and to solicit the aid of the International Monetary Fund (IMF) to assess its results. Despite these twists, certain files were discussed and made progress. First of all, the G20 agreed to work to increase the resources of the IMF if need be, and to reflect on ways for the IMF to collaborate with the European Financial Stability Facility (EFSF).
The G20 also committed to moving more quickly towards a more market-based exchange system, without however giving any clear time frame. Members particularly hailed China’s desire to increase the flexibility of its exchange rate. Finally, the currencies of certain emerging countries, such as the yuan, are to be integrated in the basket of the Special Drawing Rights (SDR), the international reserve asset set up by the IMF, in 2015 or earlier if they respect the criteria defined by the Fund. G20 countries have also committed to “sustainably increase agricultural production and productivity” and to strengthen the transparency of agricultural raw material markets via the gathering of data by the FAO. They have also committed to improving market regulation for agricultural raw materials in order to restrict extreme price volatility while not coming to any agreement on coercive measures.
The G20 has also committed to checking the bonuses distributed by banks, and to pointing out lacunae in the respect of international standards. The Financial Stability Board (FSB) will also be reformed to improve its capacity to coordinate and control the financial regulation programme. This same institution has published a first list of “global systemically important financial institutions”, that is, institutions whose weakness threatens to undermine the international financial system. These establishments will be subject to reinforced supervision, a new international standard for resolution regimes, and from 2016 onwards, additional loss absorbency. In addition, the G20 confirmed its commitment to regulating, by the end of 2012, financial derivatives. Finally, the G20 governments adopted a multilateral convention aiming at reinforcing tax cooperation. This convention notably includes the automatic exchange of information, multilateral tax inspection procedures, and assistance in the recovery of tax debts. The G20 denounced eleven tax havens, with Switzerland and Lichtenstein now required to remedy certain inadequacies.