Essays

The 1997 Asian Financial Crisis necessitated that major advanced and emerging countries come together to stabilize the global financial market. This resulted in the establishment of the Group of Twenty or G-20 bringing together systemically important industrialized and developing economies to discuss key issues in the global economy. The inaugural meeting of the G-20 took place in Berlin, on December 15- 16, 1999, hosted by German and Canadian finance ministers.

The growing recognition that key emerging-market countries were not adequately included in the core of global economic discussion and governance was also one of the reasons for the establishment of G-20. The G-7 took the initiative to promote dialogue and analysis between them and the emerging-market countries. The G-22 met at Washington D.C. in April and October 1998 to involve non-G-7 countries in the resolution of global aspects of the financial crisis then affecting emerging-market countries. Two subsequent meetings comprising a larger group of participants (G-33) held in March .mil April 1999 discussed reforms of the global economy and the international financial system. The proposals made by the G-22 and the G 33 to reduce the world economy's susceptibility to crises showed the potential benefits of a regular international consultative forum embracing the emerging- market countries. The creation of the G 20 institutionalized such a regular dialogue with a constant set of partners.

The G-20 is made up of the finance ministers and central bank governors of 19 countries, namely Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, Republic of Korea, Turkey, United Kingdom and the United States of America. The European Union, represented by the rotating Council presidency and the European Central Bank, is the 20th member, of the G-20. The Managing Director of the International Monetary Fund (IMF) and the President of the World Bank, plus the chairs of the International Monetary and Financial Committee and Development Committee of the IMF and World Bank, also participate in G-20 meetings on an ex-officio basis to ensure global economic for a and institutions work together. In addition, experts from private-sector institutions and non-government organisations are invited to G-20 meetings on an ad hoc basis in order to exploit synergies in analysing selected topics and avoid overlap.

The G-20 brings together important industrial and emerging-market countries from all regions of the world. The G-20 member countries, together, represent around 90 per cent of global gross national product, 80 per cent of world trade (including EU intra-trade) as well as two- thirds of the world's population. Its economic weight and broad membership gives the G-20 a high degree of legitimacy and influence over the management of the global economy and financial system. As such, it has become a premier forum for international economic development that promotes open and constructive discussion between industrial and emerging- market countries on key issues related to global economic stability.

Since its inception, the G-20 has held annual Finance Ministers and Central Bank Governors' Meetings and discussed measures to promote the financial stability of the world and to achieve a sustainable economic growth and development. It has contributed to the strengthening of the international financial architecture- by providing opportunities for dialogue on national policies, international cooperation, and international financial institutions. It has brought agreement about policies for growth, reducing abuse of the financial system, dealing with financial crises and combating terrorist financing.'

In 2004, G-20 countries committed to new higher standards of transparency and exchange of information on tax matters to combat abuses of the financial system and illicit activities including tax evasion. In 2008, when the financial and economic crisis spread across the globe, the G-20 members took concerted and decisive actions which helped the world deal effectively with the crisis. Among a number of significant and concrete outcomes delivered by the G-20 are its commitment to implement the unprecedented and most coordinated expansionary macroeconomic policies, including the fiscal expansion of US $5 trillion and the unconventional monetary policy instruments; to significantly enhance the financial regulations, notably by the establishment of the Financial Stability Board (FSB); and to substantially strengthen the International Financial Institutions (IFIs), including the expansion of resources and the improvement of precautionary lending facilities of the IFIs.

Unlike international institutions such as the Organization for Economic Co-operation and Development (OECD), IMF or World Bank, the G-20 has no permanent staff of its own. The G-20 chair rotates between members, and is selected from a different regional grouping of countries each year. The former chairs have been Canada (1999-2001), India (2002), Mexico (2003, Germany (2004), China (2005), Australia (2006), South Africa (2007), Brazil (2008), and United Kingdom (2009). South Korea and France are chairs for 2010 and 2011 respectively.

As a normal practice the G-20 finance ministers and central bank governors meet once a year. Their meeting is usually preceded by two deputies' meetings and extensive technical work. This technical work takes the form of workshops, reports and case studies on specific subjects, that aim to provide ministers and governors with contemporary analysis and insights, to better inform their consideration of policy challenges and options.

An underlying principle of the G-20 is to achieve consensus with regard to comments, recommendations and measures to be adopted. There are no formal votes or resolutions on the basis of fixed voting shares or economic criteria. Every G-20 member has one 'voice' with which it can take an active part in G-20 activity. To this extent the influence a country can exert is shaped decisively by its commitment.

At the 2009 Pittsburgh Summit, recognizing that more needs to be done to ensure a strong, sustained and balanced global recovery, the G-20 Leaders designated the G-20 as the premier forum for international economic cooperation. In 2010, the G-20 is expected to double its efforts to help the world make a successful transition from global recovery to stronger, more sustainable and balanced growth. In order to achieve its aims, the G-20 needs to build on its past achievements, increase cooperation among members, and have a very close cooperation of its Troika consisting of its present, past and future chairs.