On Friday and Saturday, the G-7 held an informal meeting in Iqaluit, Nunavut to discuss, among other issues, the global economic situation. The agenda for the meeting included:
- Following through on financial sector reforms;
- Strengthening international financial institutions to enable them to better respond to economic volatility, while ensuring they better reflect the global economy of today; and
- Ensuring a sustainable global economic recovery.
Jim Flaherty, Canada’s Minister of Finance, noted that while the global economy has been showing signs of recovery, the G-7 must “continue to deliver the stimulus to which [it is] mutually committed and begin to look ahead to exit strategies and move to a more sustainable fiscal track, consistent with continued recovery.” The group agreed that financial institutions that played a hand in the recent financial crisis should be held responsible for their actions, but failed to reach a consensus on how such institutions should be made to bear the costs. The British government has imposed a temporary 50% tax on large bonuses paid at banks. Canada introduced a three-part proposal that included the institution of capital rules, the re-creation of a transparent securitization market and the establishment of market infrastructure specifically for derivatives. The United States has proposed both a fee on the largest financial companies aimed at recovering taxpayer losses associated with bailouts, as well as a “skin in the game rule” that would require lenders to keep on their books a minimum percentage of the loans they securitize in an effort to make them more cognizant of the repayment potential of the loans they make.
No final decisions were reached at the meeting. The next meeting of the G-7 is scheduled to coincide with the annual spring meetings of the International Monetary Fund and the World Bank in Washington D.C. this April.