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G20 Finance Ministers: Careful Coordination Needed to Protect World Economic Recovery

  • Kurt Achin

Financial chiefs of the world's leading economies have wrapped up a gathering in South Korea with wary optimism about the future, and a call for coordinated efforts to sustain growth.

At a similar gathering last year, members of the so-called G20 set of advanced economies agreed on emergency spending to stem a global crisis brought on by the collapse of U.S. investment bank Lehman Brothers in late 2008.

The consensus at this year's meeting, here at the South Korean seaside city of Busan, is that those measures have worked. Central bankers and finance ministers gathered here from around the world say the economy is growing again.

Now, many leaders agree it is time for them to start backing off from stimulus spending, and get their debts and deficits under control. The ongoing debt crisis in Greece and other southern European countries served as a reminder at this meeting of the danger of overspending - but also of the possibility that trimming spending too sharply could plunge the world economy back into recession.

South Korean Finance Minister Yoon Jeung-hyun, the host, says leaders have agreed to strike a balance.

Summarizing a final group communiqué Saturday, he says recent events highlight the importance of sustainable public finances. He says member countries need to put in place credible policies that encourage growth and are sustainable, in a way that is tailored to each country's individual circumstances.

G20 members also want new regulations, to help avoid the kind of risky behavior by financial institutions that brought on the U.S. banking crisis. U.S. Treasury Secretary Timothy Geithner says reforming international finance has Washington's support.

"The United States is moving aggressively to fix the things we got wrong, and to strengthen our economic fundamentals," said Geithner. "And we will give our full support to the G20 agenda of economic reform."

One step that was widely discussed coming into the meeting was a tax on certain bank transactions, commonly called a "bank levy." Funds raised by such a levy would have been set aside for future bank bailouts if necessary. That idea was dropped amid disagreements, but members say they still want to agree on some kind of "safety net" for international banking.

The communiqué produced at the Busan meeting will be put before heads of government when they gather in Seoul for a G20 summit in Seoul this November.

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