G20

Friday, February 23, 2007

G-20 at Davos

The G-20 was discussed at the World Economic Forum in Davos last month.

"Might the G20 become the G8 of the 21st century?"

Participants generally agreed that the G7/G8 formula representing only a small group of the world’s richest countries has outlived its usefulness

Chinese leaders believe strongly in the potential of the G20. Yu Yongding, Director, Institute of World Economics and Politics, Chinese Academy of Social Sciences, said "We want to get involved and make a contribution. We believe the G20 is very important for global governance." But China has no interest in the G8, added Yu. "We don’t want to join a rich man’s club."

But participants also agreed that the G20, which incorporates economies deemed to be of greatest significance for the international finance system, must shape a suitable infrastructure and change its current informal nature if it is to develop into a genuine global institution. It will need to create permanent mechanisms, said Charles H. Dallara, Managing Director, Institute of International Finance (IIF), USA. "There are limits to what the G20 can do without a headquarters," said Kenneth Rogoff, Thomas D. Cabot Professor of Public Policy and Professor of Economics, Harvard University, USA. "It can’t expand what it is doing much if you don’t have a structure or a secretariat."

Sunday, February 18, 2007

Will the G-20 correct the Bretton Woods Institutions?

Both the G-8 and G-20 say they are very concerned about the ineffectiveness of the Bretton Woods Institutions. Are they serious? In this connection, documents on the site of the Bretton Woods Project make interesting reading.

We learn in one case of the IMF's (key Bretton Woods Institution) attempt in 2001, no doubt because of growing accusations of serious bias in its dealings, to convince the world that it operates impartially. The International Monetary Fund's Executive Board therefore introduced the mechanism of the Independent Evaluation Office - a form of audit. The Office was mandated to operate independently of IMF management and at arm's length from the IMF's Executive Board.

In September 2006, the IEO published a report An Evaluation of the IMF's Multilateral Surveillance. The report emphasised the need for the IMF to persuade effectively and widely, and thought it should distribute not only raw information, but informed analysis.

The IEO also recommended that the IMF should get its message across better by interacting more with intergovernmental groups, particularly the G-7/8 and the G-20. However the IMF disregarded this advice.