News / Economy

G-20 Leaders Wrestle with Debt, Trade, Regulation

Leaders from the world's 20 most important economies gather in Toronto next weekend [June 26-27] to discuss the best ways to guide the global economy into a stronger recovery. 

The leaders gathering in Toronto are from nations that account for 90 percent of global economic output, 80 percent of world trade, and two-thirds of the world's population.

Many of these leaders agree that the global financial crisis made it clear there is a need for better ways to regulate financial firms, but they disagree on how to go about it.

Some finance ministers are calling for banks to lend a smaller portion of their money and to keep more on hand in case a loan or investment goes bad.

Other ideas would limit the amount of borrowed money, or leverage, financial firms can use and seek ways to cope with failing financial companies that minimizes the damage to the rest of the economy.

Jose Vinals of the International Monetary Fund expects leaders in Toronto to decide whether to tax banks to pay the cost of future financial problems.  But he says they will put off making decisions on other issues.

"Toronto will be a crucial time to examine where is progress in order to continue moving the regulatory agenda forward for the final decisions to be taken in Seoul [, South Korea].  This is the expectation," Vinals stated.

Sebastian Mallaby of the Council on Foreign Relations, says it is crucial for the diverse nations of the G-20 to work together to govern their financial firms. "Financial institutions are cross-border; they are multi-national; they are global -- so you ought to have global rules to try and deal with them.  But that is not the way the Congress is dealing with them in the United States and that is not the way I expect European regulators will go either," he said.

Mallaby is the author of a book on financial issues called "More Money Than God" and says international cooperation might fade as trade resumes and many economies continue recovering from the 2008 financial crisis.

Another kind of crisis erupted in Greece as that nation's high levels of debt raised doubts among lenders that they might be repaid.  Efforts to reduce the deficit by slashing government spending sparked riots in Athens.

Europe's stronger economies, especially Germany, gave Greece little choice. They insisted that Greece institute a strict austerity plan as a condition for aid.  G-20 nations also are expected to discuss targets for cutting deficits.

Economist Fred Bergsten of the Peterson Institute for International Economics says the European debt crisis is high on the G-20 agenda and that it is a warning to other nations. "The United States and other countries face similar risks, albeit so far on a smaller scale," he said.  "But if the problems are not corrected, they could be just as big here, just as big in other deficit countries around the world."

The leaders will also talk about global trade imbalances, including the huge trade deficit run by the United States and the massive trade surplus earned by China.  The imbalance is a source of political friction between the two countries.

About a week before the summit, Chinese officials said they would allow trading in their currency to be more flexible, meaning it would probably become stronger.  A stronger Chinese yuan means Chinese-made goods would be more expensive on world markets, which would reduce what Beijing's critics say is an unfair price advantage that contributes to trade imbalances.  Strengthening China's currency would also make goods made elsewhere less expensive for Chinese consumers, drive up imports, and ease trade tensions.  One key question on this issue is how much and how quickly Beijing will allow its currency to change.

Leaders of eight industrialized and mostly wealthy nations, known as the G-8, will get an early start on these difficult issues by meeting Friday and Saturday [June 25-26] at a resort in rural Canada, a short distance from the G-20 meeting in Toronto.

You May Like

UN Fears Rights Violations in China-backed Projects

UNHCHR investigates link between financing development and ignoring safeguards for human rights More

Boko Haram Violence Tests Nigerians’ Faith in Buhari

New president has promised to stem insurgency; he’s scheduled to meet with President Obama at White House July 20 More

Social Media Network Wants Privacy in User’s Hands

Encryption's popularity in messaging is exploding; now it's the foundation of a new social network More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Making Music, Fleeing Bombs: New Film on Sudan’s Internal Refugeesi
X
Carolyn Weaver
July 06, 2015 6:47 PM
In 2012, Sudanese filmmaker Hajooj Kuka went to make a documentary among civil war refugees in Sudan’s Blue Nile and Nuba Mountains region. What he found surprised him: music was helping to save people from bombing raids by their own government. VOA’s Carolyn Weaver has more.
Video

Video Making Music, Fleeing Bombs: New Film on Sudan’s Internal Refugees

In 2012, Sudanese filmmaker Hajooj Kuka went to make a documentary among civil war refugees in Sudan’s Blue Nile and Nuba Mountains region. What he found surprised him: music was helping to save people from bombing raids by their own government. VOA’s Carolyn Weaver has more.
Video

Video Rice Farmers Frustrated As Drought Grips Thailand

A severe drought in Thailand is limiting the growing season of the country’s important rice crop. Farmers are blaming the government for not doing more to protect a key export. Steve Sandford reports from Chiang Mai, Thailand.
Video

Video 'From This Day Forward' Reveals Difficult Journey of Transgender Parent

In her documentary, "From This Day Forward", filmmaker Sharon Shattuck reveals the personal journey of her transgender father, as he told his family that he always felt he was a woman inside and decided to live as one. VOA’s Penelope Poulou has more.
Video

Video Floodwaters Threaten Iconic American Home

The Farnsworth House in the Midwest State of Illinois is one of the most iconic homes in America. Thousands of tourists visit the site every year. Its location near a river inspired the design of the house, but, as VOA’s Kane Farabaugh reports, that very location is now threatening the existence of this National Historic Landmark.
Video

Video Olympics Construction Scars Sacred Korean Mountain

Environmentalists in South Korea are protesting a Winter Olympics construction project to build a ski slope through a 500-year-old protected forest. Brian Padden reports that although there is strong national support for hosting the 2018 Pyeongchang Winter Olympics, there are growing public concerns over the costs and possible ecological damage at the revered mountain.
Video

Video Xenophobia Victims in South Africa Flee Violence, Then Return

Many Malawians fled South Africa early this year after xenophobic attacks on African immigrants. But many quickly found life was no better at home and have returned to South Africa – often illegally and without jobs, and facing the tough task of having to start over. Lameck Masina and Anita Powell file from Johannesburg.
Video

Video Family of American Marine Calls for Release From Iranian Prison

As the crowd of journalists covering the Iran talks swells, so too do the opportunities for media coverage.  Hoping to catch the attention of high-level diplomats, the family of American-Iranian marine Amir Hekmati is in Vienna, pleading for his release from an Iranian prison after nearly 4 years.  VOA’s Heather Murdock reports from Vienna.
Video

Video UK Holds Terror Drill as MPs Mull Tunisia Response

After pledging a tough response to last Friday’s terror attack in Tunisia, which came just days before the 10th anniversary of the bomb attacks on London’s transport network, British security services are shifting their focus to overseas counter-terror operations. VOA's Henry Ridgwell has more.
Video

Video Obama on Cuba: This is What Change Looks Like

President Barack Obama says the United States will soon reopen its embassy in Cuba for the first time since 1961, ending a half-century of isolation. VOA White House correspondent Luis Ramirez reports.
Video

Video Hate Groups Spread Influence Via Internet

Hate groups of various kinds are using the Internet for propaganda and recruitment, and a Jewish human rights organization that monitors these groups, the Simon Wiesenthal Center, says their influence is growing. The messages are different, but the calls to hatred or violence are similar. VOA's Mike O’Sullivan reports.
Video

Video Blind Somali Journalist Defies Odds in Mogadishu

Despite improving security in the last few years, Somalia remains one of the most dangerous countries to be a journalist – even more so for someone who cannot see. Abdulaziz Billow has the story of journalist Abdifatah Hassan Kalgacal, who has been reporting from the Somali capital for the last decade despite being blind.
Video

Video Rabbi Hits Road to Heal Jewish-Muslim Relations in France

France is on high alert after last week's terrorist attack near the city Lyon, just six months after deadly Paris shootings. The attack have added new tensions to relations between French Jews and Muslims. France’s Jewish and Muslim communities also share a common heritage, though, and as far as one French rabbi is concerned, they are destined to be friends. From the Paris suburb of La Courneuve, Lisa Bryant reports about Rabbi Michel Serfaty and his friendship bus.

VOA Blogs

World Currencies

EUR
USD
0.9084
JPY
USD
122.73
GBP
USD
0.6431
CAD
USD
1.2639
INR
USD
63.444

Rates may not be current.