The most important thing to come out of the Pittsburgh Summit — the final communiqué is here — is the decision to lock in the G-20 as the pre-eminent international economic body:
Today, we designated the G-20 as the premier forum for our international economic cooperation....We agreed to have a G-20 Summit in Canada in June 2010, and in Korea in November 2010. We expect to meet annually thereafter, and will meet in France in 2011.
This is a win for Kevin Rudd, a win for Australia, and most importantly, a win for the effectiveness of the international architecture.
What else did Leaders agree to? The outcome as presented in their communiqué tallies reasonably closely with the checklist posted last week. So, for example, there was a nod towards the desirability of coordinating exit strategies, with Leaders saying they would ‘task our Finance Ministers...to continue developing cooperative and coordinated exit strategies recognising that the scale, timing, and sequencing of this process will vary across countries or regions and across the type of policy measures.’
Similarly, there was some rhetoric directed at global imbalances, with a reference to the need to ‘manage the transition to a more balanced pattern of global growth’. There is to be a new ‘Framework for Strong, Sustainable and Balanced Growth’, with the potentially interesting feature that the IMF is to be tasked with producing a ‘forward-looking analysis of whether policies pursued by individual G-20 countries are collectively consistent with more sustainable and balanced trajectories for the global economy’.
This review process might turn out to be quite useful, although if past experience with the IMF’s Multilateral Consultation on Global Imbalances — which basically went nowhere — is any guide, then at best only very cautious optimism as to its efficacy is warranted at this point.
When it comes to international financial regulation, leaders said they would ‘commit to developing by end-2010 internationally agreed rules to improve both the quantity and quality of bank capital and to discourage excess leverage’, which again is in line with the consensus on what was needed before Pittsburgh (ie, more capital, less leverage), but which still leaves plenty of room for international disagreements over just what the proposed new regime will look like. There was also the widely anticipated statement on bankers’ compensation, which refrained from endorsing specific caps on pay and bonuses and instead called for a greater focus on delivering the appropriate kinds of incentives.
Reform of IMF governance produced an agreement to ‘a shift in quota share to dynamic emerging market and developing countries of at least five percent from over-represented to under-represented countries using the current IMF quota formula as the basis to work from.’ This is a modest step in the right direction, but still leaves reform hostage to the significant over-representation of Europe. Simon Johnson has an interesting proposal in this context.
Finally, there was a promise to ‘seek an ambitious and balanced conclusion’ to the Doha round this year, which in theory should be good news, but once again past experience suggests don’t hold your breath.