This past weekend, the G-20 Finance Ministers and Central Bank Governors met in London ahead of the Pittsburgh Summit scheduled for later this month to assess their progress in furnishing the Global Plan for Recovery and to agree on further actions to be taken to achieve sustainable growth and create a stronger international financial system. In their Communiqué, the G-20 Finance Ministers and Central Bank Governors agreed ON the “need for a transparent and credible process for withdrawing [its] extraordinary fiscal, monetary and financial sector support as recovery becomes firmly secured,” through the development of cooperative and coordinated exit strategies. Additionally, they agreed that more progress must be made with respect to strengthening international financial institutions, including the overhaul of the International Monetary Fund’s (IMF) lending facilities, ensuring adequate capital levels of Multilateral Development Banks, and the implementation of governance reforms for international financial institutions. Furthermore, the G-20 leaders stated that “while the financial markets are stabilizing and the global economy is improving, [it] remain[s] cautions about the outlook for growth and jobs.”

In their Declaration on Further Steps to Strengthen the Financial System, the G-20 Finance Ministers and Central Bank Governors reaffirmed their commitment from the G-20 Summit in April to prevent the “build-up of excessive risk and future crises and support sustainable growth.” The G-20 leaders identified the following actions that must be taken by the Financial Stability Board and the Global Forum on Transparency and Exchange of Information to ensure the strengthening of the global financial system:

  1. Delivering a framework for corporate governance and compensation policies, which would include greater disclosure of the correlation between remuneration and risk-taking, global standards on pay structure, and corporate governance reforms;
  2. Implementing stronger regulation and oversight for systemically important firms;
  3. Developing stronger prudential regulation and urging banks to “retain a greater proportion of current profits to build capital, where needed, to support lending;”
  4. Confronting non-cooperative jurisdictions (NCJs) by implementing countermeasures to tackle NCJs that fail to meet regulatory standards and tax information exchange standards;
  5. Implementing consistent and coordinated international standards, including Basel II, which was discussed by the U.S. Treasury prior to this meeting; and
  6. Facilitating convergence towards a single-set of global independent accounting standards by encouraging the Independent Accounting Standards Board (IASB) to take account of the Basel Committee guiding principles on IAS 39 and the report of the Financial Crisis Advisory Group.

Furthermore, the G-20 leaders released a progress report of its actions taken since the previously held G-20 summits in April and last November.