Today, in advance of the upcoming meeting of the G-20 Finance Ministers and Central Bank Governors, Treasury Secretary Tim Geithner issued a statement and fact sheet outlining the position of the United States with respect to the necessary global response to fully address the global financial crisis. Secretary Geithner set forth the agenda items as follows: (i) how to ensure recovery and restart growth; and (ii) how to reform and coordinate the international regulatory and supervisory system to ensure that no such crisis occurs again.
With respect to economic recovery, Secretary Geithner called for macroeconomic stimulus and cited as a reasonable benchmark the International Monetary Fund recommended fiscal stimulus objective of two percent of aggregate gross domestic product for each of 2009 and 2010. Secretary Geithner also highlighted the importance of helping emerging market and developing economies including, among other initiatives, a significant expansion of the New Arrangements to Borrow. He emphasized the commitment of the United States to open trade and investment policies which he noted was essential to the global economy. He further urged immediate global financial sector actions to complement recent stimulus efforts in the United States.
With respect to financial reform, Secretary Geithner emphasized the need to strengthen the Financial Stability Forum, including expanding membership to include all G-20 countries, in order to permit the collaboration necessary to develop strong regulatory and supervisory policies. He also called for substantial reform of international financial institution governance to prevent systematically significant financial institutions, markets and products from avoiding necessary oversight. The U.S. is expected to lead this effort. Finally, he urged the modernization of international financial institution governance to include greater representation of “dynamic” emerging economies in these institutions.