Laying a Foundation for the 21st Century Global Economy
This week, when President Obama welcomes G-20 leaders to the Pittsburgh Summit for two days of discussions, it will cap one of the most remarkable chapters in global economic and financial history, let alone my lifetime.
When the G-20 Leaders met in April, they did so at the darkest hour in global finance in decades. Global output was plummeting, trade was collapsing and jobs were being destroyed. The G-20 agreed then to do whatever it took through macroeconomic support and financial repair efforts to help ensure recovery. They agreed to continue implementing robust reforms to financial supervision and regulation so a crisis of the magnitude being experienced was not repeated. They mobilized nearly $1 trillion in support through international institutions, such as the IMF and World Bank, to support emerging market and developing economies.
As the Leaders convene in Pittsburgh, the reality is that their actions have been succeeding. G-20 economies and financial markets have stabilized and growth is resuming; financial firms are slowly restoring their health; and the drain in capital flows to emerging markets has been reversed. But alas, the recovery remains fragile and we are not out of the woods. Hence, the Pittsburgh Summit should signal the international community’s continued commitment to do what it takes to ensure recovery and avoid any premature withdrawal of stimulus.
But the Pittsburgh Summit must achieve more than that. With recovery in sight, the world community needs to begin laying a foundation for the post-crisis 21st century global economy. It should put in place a framework for sustainable and balanced global growth that avoids the booms and busts of the past; it should bear down on critically needed financial supervisory and regulatory reforms so that financial institutions are far better able to withstand shocks in the future, while serving people; it should help modernize the IMF and World Bank to reflect the challenges and realities of the growing economic weight of dynamic emerging markets in the 21st century. It should take concrete steps to help the world’s poorest, so that all people from every corner of the world benefit from the global economy. And it should affirm the G-20’s commitment to low carbon economic growth and efforts toward a successful outcome of the UN climate conference in Copenhagen.
The United States has been a leader throughout this period, supporting growth through the Administration’s stimulus plans; restoring confidence to the U.S. financial system through the Financial Stability Plan, including through the successful completion of a transparent stress testing exercise under the Supervisory Capital Assistance Program; and helping marshal resources for emerging markets and developing countries through the President’s call for mobilizing large scale IMF resources to backstop the global financial system.
In Pittsburgh, we cannot let the momentum for reform fade as the crisis recedes. The G-20 has made a lot of progress, but there is still quite a way to go.
Of course, at the more mundane and less ethereal personal level, the build-up to London and Pittsburgh entailed many long flights, long hours in the office, marathon negotiation sessions, and lots of writing under stress. In Pittsburgh, another two-day marathon session and little sleep lie ahead. But this period still rates as one of the most fantastic experiences of my lifetime because I know that history is now being written and that this is the time to act. I had the privilege to meet President Obama in the Oval Office and then sit behind him in London amid a roomful of the world's Leaders. The fact that I, as a mere “mandarin” have been so lucky to have had these opportunities makes these experiences all the more treasured. Throughout, it has been a tremendous pleasure to work under the leadership and with the support of Secretary Geithner in tackling these historic challenges.
About the Author: Mark Sobel serves as Acting Assistant Secretary of the Treasury for International Affairs. He is a long time civil service "mandarin," heavily involved in preparing the preceding G-20 Leaders Summits and a decade of G-20 Finance Ministers and Central Bank Governors meetings. Sobel served as the Finance Deputy at the April G-20 London Summit.
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Comments
Lewis L. in Australia writes:
Hi Mark
The site developed by Cate Long and the extensive content of its data on the global financial crisis (GFC), makes for excellent knowledge based reading and is undoubtedly the best reference site anywhere on the planet Earth.
I am an avid daily reader....please convey my congratulations to Cate on her brilliant contribution to economic consumers around the globe.
Lewis L.
Australia
Posted on Thu Sep 24, 2009
Cate in Washington, D.C. writes:
Thank you for the personal background on the planning for the meeting.
The U.S. Congress has also been working hard on the issues related to financial markets reform and will likely be informed by the outcome of the G-20 meetings.
To learn more about Congress's efforts see Riski, the open source platform for financial markets reform:
http://freerisk.org/wiki/index.php/Main_Page
Posted on Wed Sep 23, 2009
Mike in U.S.A. writes:
Thanks for the informative post.
Posted on Wed Sep 23, 2009
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