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EU drives G20 crisis action - 02/04/2009

Mirek Topolánek and José Manuel Barroso© EC

Throwing a lifeline to the global economy, the G20 agrees to channel $1.1 trillion (€832bn) into the IMF and other institutions and to tighten rules on financial markets.

The agreement was welcomed by the EU, which has led efforts to crack down on loose banking practices that caused the financial crisis.

Echoing the bloc’s proposals, Group of 20 leaders announced measures to promote transparency and to safeguard against system-wide threats and excessive risk-taking. These include new rules on bankers’ pay and bonuses - an issue that has sparked public anger - and an end to tax havens that do not share tax information.

The summit in London was step two in the group’s efforts to tackle the global financial crisis - the biggest recession since the 1930s. The previous G20 was held in November in Washington.

To help countries in trouble, the leaders endorsed $500bn (€370bn) in new funds for the IMF, bringing its resources to $750bn (€556bn). The EU is contributing €75bn of this. In addition, G20 leaders agreed to a $250bn (€185bn) increase in the IMF's overdraft facility for struggling member countries. A lender of last resort, the IMF asked for the boost after bailing out more than a dozen countries recently.

A further $100bn (€74bn) will be available to fund development, and will be channelled via banks set up by donor countries. $250bn (€185bn) will get trade flows started again.

This is in addition to money being pumped into the world economy by governments and central banks around the world. The leaders said the stimulus should amount to $5tr (€3.7tr) by next year, the largest the world has ever seen. Leaders predicted this would create millions of jobs worldwide.

The G20 also gave the World Trade Organisation responsibility for naming and shaming those who resort to protectionism. It pledged to conclude rapidly the Doha trade talks- which could boost the world economy by $ 150 billion.

In line with EU recommendations, the G20 plan gives international financial institutions a bigger role in monitoring economic risks. It also gives emerging and developing economies more voice in these institutions.

 

G20 summit - leaders' statement

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