This morning, Treasurer Wayne Swan announced that the Government has given the Lowy Institute a grant to establish a G20 Studies Centre. There will certainly be plenty to study.

We've been tracking the ascent of the G20 to its current role as the 'premier forum' for international economic cooperation since the early days of this blog, and I've written several times on the challenges to global economic governance the grouping has had to grapple with.

This is an important time to be thinking about the future of international economic governance in general and the role of the G20 in particular. Despite the battering that trade and financial flows took during the global financial crisis, globalisation continues to tie the world's economies closely together, with the result that spillovers from things going wrong – or right – in one part of the global economy quickly have important implications for the rest of us. 

This is all the more so given that the world has not only just suffered one major economic crisis but remains at risk from another in the shape of the ongoing eurozone mess. As the IMF emphasised in its July 2012 spillover report, a 'world of highly correlated asset prices, ubiquitous financial shocks, and limited policy space is a world ripe for spillovers.'

Meanwhile, and just to make the policy challenges even more interesting, the rise of new economic powers (and the return of some old ones) as a result of the Great Convergence means that today's global economic governance needs to reflect the fact that we now live in an increasingly multipolar world economy – a world where the views of a greater number of economic players needs to be taken into account.

The G20 represents world leaders' response to these challenges. It is arguably our first cut at building international economic governance fit for the twenty-first century.

Elevated to a leaders' format in response to the turmoil of the 2008-09 financial crisis, the grouping got off to a good start. As a recent Brookings review of the G20 notes, within months of the first leaders' meeting in Washington DC in November 2008, the G20 had managed to speed up agreement on Basel 3, established the Financial Stability Board, and made a start on reforming the finances and improving the governance of the IMF. It also provided a united front at the London Summit that helped restore some confidence to a crisis-battered world economy.

Since then, some of the early optimism around the G20 has faded, and more recent meetings haven't received such a good press: after the 2010 Seoul Summit, for example, the FT declared: 'G20 show how not to run the world'. Subsequently, both last year's Cannes and this year's Los Cabos leaders' meetings have been overshadowed by the eurozone crisis.

More generally, global economic governance overall is widely seen as facing significant tests right now. Thus, according to the authors of a recent Geneva Report on the future of global cooperation, with the exception of some successes with central bank cooperation and monetary policy, on 'virtually every other important global economic issue, international cooperation is stalled, flawed or non-existent.'

Still, as I've written before, the fact that the G20 is struggling with some tough problems is rather predictable, given the complex set of global circumstances we face, so shouldn't be seen as indicators of failure. What's more, some of the very things that made the G20 an effective replacement for the G7/G8 – in particular, its expanded and more diversified membership – also make reaching a consensus a harder ask than was the case for the smaller grouping of rich countries which made up its predecessor. 

Note, however, that this is a design feature, not a flaw. Working out how best to manage this more multipolar global economy is precisely one of the things that the G20 has been set up to do. All of which suggests plenty of scope for an exciting research agenda for the Institute and this new research strand.