Today, the G-20 leaders released a communiqué outlining the agreements reached at the G-20 Summit in London. Citing the “greatest challenge to the world economy in modern times” the G-20 leaders pledged to do “whatever is necessary” to:

  • Restore confidence, growth, and jobs
  • Repair the financial system to restore lending
  • Strengthen financial regulation to rebuild trust
  • Fund and reform our international financial institutions to overcome this crisis and prevent future ones
  • Promote global trade and investment and reject protectionism, to underpin prosperity
  • Build an inclusive, green, and sustainable recovery

Also released were supporting documentation, including a Declaration on delivering resources through international financial institutions, a Declaration on strengthening the financial system, and a progress report on the actions taken to implement the plan adopted at the G-20 Summit in Washington in November. Set forth below are the key elements of the leaders' statement, supplemented by some details from the two declarations.

Restoring growth and jobs

Amid active disagreements about the appropriate level of fiscal stimulus efforts, the G-20 leaders did agree on the following:

  • Concerted fiscal expansion, which will, by the end of next year, amount to $5 trillion, raise output by 4%, and accelerate the transition to a green economy
  • Cut interest rates and maintain expansionary policies and use the full range of monetary policy instruments, including unconventional instruments, consistent with price stability
  • Restore the normal flow of credit through the financial system and ensure the soundness of systemically important institutions
  • Provide over $1 trillion of additional resources for the world economy through international financial institutions (most notably the IMF) and trade finance.
  • Put in place credible exit strategies from the measures that need to be taken now to support the financial sector and restore global demand
  • Refrain from competitive devaluation of currencies and promote a stable and well-functioning international monetary system

Strengthening financial supervision and regulation

The G-20 leaders have committed to building a “stronger, more globally consistent, supervisory and regulatory framework for the future financial sector, which will support sustainable global growth and serve the needs of business and citizens.” The G-20 leaders have resolved to implement the Action Plan agreed to at the last meeting of the G-20 leaders in Washington, D.C. in November. In particular, the G-20 leaders agreed to:

  • Establish a new Financial Stability Board (FSB) with a strengthened mandate, as a successor to the Financial Stability Forum (FSF), including all G-20 countries, FSF members, Spain, and the European Commission
  • Require the new FSB to collaborate with the IMF to provide early warning of macroeconomic and financial risks and the actions needed to address them
  • Reshape regulatory systems so that each country’s authorities are able to identify and take account of macro-prudential risks
  • Extend regulation and oversight to all systemically important financial institutions, instruments and markets; including, for the first time, systemically important hedge funds
  • Endorse and implement the FSF’s new principles on pay and compensation and to support sustainable compensation schemes and the corporate social responsibility of all firms
  • Take action to improve the quality, quantity, and international consistency of capital in the banking system
  • Take action against non-cooperative jurisdictions, including tax havens
  • Call on the accounting standard setters to work urgently with supervisors and regulators to improve standards on valuation and provisioning and achieve a single set of high-quality global accounting standards
  • Extend regulatory oversight and registration to credit rating agencies to ensure they meet the international code of good practice, particularly to prevent unacceptable conflicts of interest

Strengthening global financial institutions

The G-20 leaders have agreed to make available “an additional $850 billion of resources through the global financial institutions to support growth in emerging market and developing countries by helping to finance counter-cyclical spending, bank recapitalizations, infrastructure, trade finance, balance of payments support, debt rollover, and social support.” To this end, the G-20 leaders agreed to:

  • Increase the resources available to the IMF through immediate financing from members of $250 billion, subsequently incorporated into an expanded and more flexible New Arrangements to Borrow, increased by up to $500 billion, and to consider market borrowing if necessary
  • Increase in lending of at least $100 billion by the Multilateral Development Banks (MDBs), including to low income countries, and ensure that all MDBs, including have the appropriate capital
  • Support a general SDR allocation which will inject $250 billion into the world economy and increase global liquidity, and urgent ratification of the Fourth Amendment
  • Reform and modernize the international financial institutions to ensure they can assist members and shareholders effectively in the new challenges they face

Resisting protectionism and promoting global trade and investment

The G-20 leaders also agreed to:

  • Refrain from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing measures inconsistent with the World Trade Organization (WTO) to stimulate exports
  • Minimize any negative impact on trade and investment of our domestic policy actions including fiscal policy and action in support of the financial sector
  • Notify promptly the WTO of any such measures and call on the WTO to monitor and report publicly on adherence to these undertakings on a quarterly basis
  • Ensure availability of at least $250 billion over the next two years to support trade finance through our export credit and investment agencies and through the MDBs

Ensuring a fair and sustainable recovery for all

Finally, the G-20 leaders agreed to:

  • Provide $50 billion to support social protection, boost trade and safeguard development in low income countries, as part of the significant increase in crisis support for these and other developing countries and emerging markets
  • Make available resources for social protection for the poorest countries, including through investing in long-term food security and through voluntary bilateral contributions to the World Bank’s Vulnerability Framework
  • Use sales of IMF gold, together with surplus income, to provide $6 billion additional concessional and flexible finance for the poorest countries over the next 2 to 3 years
  • Review the flexibility of the Debt Sustainability Framework and call on the IMF and World Bank to report to the IMFC and Development Committee at the Annual Meetings
  • Transition towards clean, innovative, resource efficient, low carbon technologies and infrastructure

In closing the G-20 leaders have agreed to meet again before the end of the year to review their progress on these commitments.