G-20 Leaders Agree To Economic Reform

Leaders from around the world gathered in Washington, D.C., over the weekend to discuss the global financial crisis. After the meeting, they issued a 10-page action plan for reform, enhancing regulation and reinforcing international cooperation.

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ANDREA SEABROOK, host:

President Bush greeted world leaders to the G-20 economic summit in Washington this morning.

President GEORGE W. BUSH: Good morning, Mr. Secretary General.

Secretary General BAN KI-MOON (United Nations): (Unintelligible).

President BUSH: Nicolas Sarkozy, good morning.

Unidentified Man: Good morning.

President NICOLAS SARKOZY (France): Good morning, President.

President BUSH: Thank you, sir.

President SARKOZY: Happy to see you here.

President BUSH: Yeah.

SEABROOK: It was a cloudy, blustery day in the nation's capital, something of a reflection of the state of the world's economy. The leaders met behind closed doors. On the agenda, what caused the economic crisis and what to do about it. After nearly five hours, the meeting ended, and the leaders issued a 10-page declaration. President Bush came out and said it had been a productive session.

President BUSH: And so it makes sense to come out of here with a firm action plan, which we have. It also makes sense to say to people that there is more work to be done, and there will be further meetings - sending a clear signal that a meeting is not going to solve the world's problems.

SEABROOK: NPR's John Ydstie is here now. And, John, did the summit declaration contain any surprises?

JOHN YDSTIE: No, no big surprises here. What we got was a general statement about the causes of the financial problems, things we've heard before - too much risk-taking by investors, the problem of overly-complex financial instruments, the failure of regulators and policymakers. Then we got a broad agreement on areas for reform, enhancing sound regulation and reinforcing international cooperation, improved monitoring of markets, that sort of thing.

SEABROOK: Hmm.

YDSTIE: There were a couple of concrete proposals, though. One involves putting together what they're calling a college of supervisors, regulators from around the world who would meet together periodically and assess the strength of big international financial institutions who do business across borders and which no single national regulator can really get a handle on.

SEABROOK: Hmm.

YDSTIE: Another concrete suggestion was setting up a stronger early warning system through the IMF and another international group called the Financial Stability Forum to try to anticipate these economic problems.

SEABROOK: Interesting. One of the big differences about this summit, John, and previous summits during financial turmoil, you've always - in those, you had a much smaller group, the G-7. Why G-20?

YDSTIE: Well, the leaders who pushed for this summit, French President Sarkozy and British Prime Minister Gordon Brown, argued the whole world is being affected by this crisis. Many nations have a stake, and they should have a voice in the solution. And in addition, with countries like China and India emerging as economic powers, it only makes sense to find solutions that also include them, especially since they actually have currency reserves that can be used to help developing nations that are now being hurt by the crisis.

And one of the real concrete directives coming out of the summit is a call to reform the structure of the world financial institutions. To give these emerging nations a greater voice is something President Bush addressed in his remarks.

President BUSH: We agree that, to better reflect the realities of today's global economy, both IMF and World Bank should modernize their governing structures. They ought to consider extending greater voting power and representation to developing nations, particularly those who have increased their contributions to the institutions.

YDSTIE: In fact, Andrea, I think getting these emerging nations involved may be the single most significant thing that happened at the meeting today.

SEABROOK: I understand that this is just the first of a series of meetings of the G-20 group. But at the next one, the U.S. will be represented by a different president.

YDSTIE: Right.

SEABROOK: President Barack Obama. Did he have any involvement today?

YDSTIE: President-elect Obama was not there, though he had been invited. His response was that the U.S. only has one president at a time. But he did have representatives there, former Secretary of State Madeleine Albright and former Republican Congressman Jim Leach of Iowa who were not at the table, but they were available on the sidelines to meet with delegations from any nation that wanted to meet with them.

SEABROOK: Mm hmm.

YDSTIE: Obama's first meeting with this group is now scheduled for next spring, April 30th, 2009.

SEABROOK: We'll be watching. NPR's John Ydstie, thanks very much.

YDSTIE: You're very welcome.

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World Leaders Lay Out Five Principles Of Reform

Leaders of the Group of 20 meet for a financial summit in Washington, D.C., on Saturday. i i

Leaders of the Group of 20 meet for a financial summit at the National Building Museum in Washington, D.C., on Saturday. Eugene Salazar/AP/IMF hide caption

itoggle caption Eugene Salazar/AP/IMF
Leaders of the Group of 20 meet for a financial summit in Washington, D.C., on Saturday.

Leaders of the Group of 20 meet for a financial summit at the National Building Museum in Washington, D.C., on Saturday.

Eugene Salazar/AP/IMF

Statement From The G-20

Read the declaration from the financial summit.

French President Nicolas Sarkozy and European Commission President Jose Manuel Barroso. i i

French President Nicolas Sarkozy (right) speaks at a press conference with European Commission President Jose Manuel Barroso after the summit. Nicholas Kamm/AFP/Getty Images hide caption

itoggle caption Nicholas Kamm/AFP/Getty Images
French President Nicolas Sarkozy and European Commission President Jose Manuel Barroso.

French President Nicolas Sarkozy (right) speaks at a press conference with European Commission President Jose Manuel Barroso after the summit.

Nicholas Kamm/AFP/Getty Images

With only a few weeks to prepare, leaders from the world's 19 largest economies and the European Union agreed Saturday on broad principles at an economic summit in Washington, D.C.

The principles eventually will lead to actions designed to prevent future economic crises like the one currently plaguing countries around the world.

Speaking after the meeting, President Bush called the agreement "an important first step."

The general principles included in the G-20's declaration include strengthening transparency and accountability in financial systems; enhancing regulation; increasing international cooperation between the countries' financial regulators; and expanding the scope of international financial institutions to include emerging economies.

The G-20 declaration also committed to free-market principles. "We underscore the critical importance of rejecting protectionism and not turning inward in times of financial uncertainty," it said.

"Our nations agree that we must make the markets, the financial markets more transparent and accountable," Bush said. He added that he believes the best way out of this crisis is through economic growth.

British Prime Minister Gordon Brown called the talks difficult, but said, "We have reached important conclusions today about trade, about financial stability and about the expansion of our economies."

The summit represented the biggest gathering of world leaders in a decade. Bush said the countries were brought together out of concern that they faced "a depression greater than the Great Depression."

Bush said details of reform plans and cooperation will be determined in coming months.

French President Nicolas Sarkozy had high expectations for the summit. He had called for wholesale changes to Western-style capitalism and called for leaders to create a new international regulator to oversee global financial companies. But the U.S. and several developing countries rejected that idea.

Speaking after the summit, Sarkozy said he was heartened that leaders could come together on a plan for action, despite such diverse interests from individual nations.

"This is a historic, historic event," he said. "Not only in this case has Europe — the European states — agreed, but the entire world has agreed to be in step with one another — in synch and respond in a coordinated fashion to the economic and financial crisis."

In his speech before the other G-20 leaders, Russian President Dmitry Medvedev said comparisons to past economic crises don't work. He said this is a 21st century and existing institutions that regulate the economy are not adequate for the challenges the world faces now. Medvedev also called for an international commission of "financial gurus" to advise world leaders.

Canadian Finance Minister Jim Flaherty said he was disappointed the summit members did not agree to require tougher rules on hedge funds.

"Our view is all significant pools of capital that are leveraged need to be subject to capitalization rules in particular," he said.

This was the first in a series of summits. The next will likely come in April, after Barack Obama takes office.

Summit participants also agreed to push for completion of the Doha round of global trade talks within the next year. This round of World Trade Organization negotiations started in 2001 and the goal was to lower trade barriers. But the talks have stalled because of disagreements between major developed and developing countries. The U.S. and the European Union also have fought over agriculture subsides.

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