Finance chiefs of the Group of 20 leading economies worked Friday to craft an agenda for keeping the global recovery on track and fending off future crises, sidestepping conflicts to present a united show of support for Europe’s $1 trillion bailout.
Though the finance ministers and central bank governors gathered in this southern Korean port city are seeking to build confidence in prospects for growth, a sense of urgency hangs over the gathering.
“The recent event in Europe and volatility in the financial market have clearly shown us the global recovery is still fragile,” said Yoon Jeung-hyun, minister of Strategy and Finance, at the opening as the chair of the session.
“Today we are meeting at a critical time when our cooperation is more important than ever to address significant economic risks and firmly secure the global recovery,” Yoon said.
The euro sank to a new four-year low Friday, as concerns resurfaced about the health of European banks. Fresh U.S. jobs data also provided scant comfort, with new job creation limited mainly to a wave of census hiring — suggesting the recovery will not bring relief soon for the millions of Americans who are unemployed.
As they discuss the agenda for a summit in Toronto later this month, the leaders face myriad demands over how to reshape the global financial system and avert a “double dip” back into recession due to the European sovereign debt crisis.
Speaking en route to Busan, U.S. Treasury Secretary Timothy Geithner expressed support for the eurozone’s efforts to shore up its fiscally shaky members.
The leaders looked likely to finesse conflicts over other issues, such as banking regulation, in favor of a strong show of support for Europe’s handling of its sovereign debt crisis.
“Sustaining world economic growth is the most important item on the G-20 agenda this weekend,” said British Chancellor George Osborne.
French Finance Minister Christine Lagarde said Friday evening’s discussion focused on growth and on reining in budget deficits, and the need to have credible mechanisms to restore stability.
Osborne said he still would be pushing for agreements on tightening banking capital requirements to be concluded.
“We want to end the uncertainty,” Osborne said in remarks read by his press secretary.
World Bank experts, gathered for a conference on the sidelines of the G-20 meeting, called for the group to recalibrate its agenda to take into account the growing potential of developing countries to help power long-term growth.
“The G-20 needs the rest of the developing world for reasons of self-interest,” said Ngozi Okonjo-Iweala, a World Bank managing director.
Growth in developing countries is forecast to average 6 percent this year — twice the rate for rich countries, she noted.
“G-20 countries need new sources of demand. The developing world has the potential, and it has the people,” she said. “The G-20 must recognize this and give development the central place it deserves in its agenda.”
Like most international gatherings, the G-20 meeting has its critics. South Korean labor union activists gathered in front of Busan’s city hall Friday, accusing the group of being “a bunch of elitists who fail to deliver action.”
“We, the honest public, are the ones suffering from the consequences of the financial crisis because these leaders aren’t resolving the fundamental problem,” Jung Yong-geon of the Korean Federation of Clerical & Financial Labor Unions said. “They only speak of more strictly regulating financial capital, never executing any policies.”
The G-20, founded in 1999, shifted its focus to crisis management after the 2008 collapse of U.S. investment bank Lehman Brothers.
Managing the European debt fiasco and resulting market turmoil has recently overshadowed longer term efforts to reform banking regulation and set up financial safety nets for countries emerging from crisis.
The finance ministers last met in Washington in April. They are preparing a communique to be issued Saturday.
South Korea, which emerged from poverty to become a technology and industrial powerhouse, assumed the rotating G-20 chair this year and will convene a summit in November in its capital, Seoul. It favors including development in the G-20 agenda.
Agreement is far from certain on proposals for a bank tax to pay for future bailouts, but others such as Canada and Australia oppose it given that their banks weathered the global crisis intact.
Geithner declined to say if the U.S. wants the G-20 to adopt a global target of 12 percent of an institution’s assets being held as a capital reserve — one option being considered. That would represent an increase from a current U.S. target of around 8 percent.
“We want to find a balance between making sure that these firms run with much more conservative, much stronger cushions against loss in future crises,” he said, refusing to say what target was being considered.
Associated Press writers Sangwon Yoon and Kelly Olsen contributed to this report.
Source: The Associated Press.