G20 Pledges New IMF Aid, Passes on Stimulus Moves

The G20 leaders pledged an additional $1.1 trillion in financing to the International Monetary Fund and other global financial institutions and announced plans to regulate tax havens and hedge funds as part of the final statement to emerge from the emergency summit.

The decisions amounted to a tripling of IMF funds to $750 billion and the group offered money to revive trade and help struggling governments.

President Obama called the moves “unprecedented steps to restore growth and prevent a crisis like this from happening again,” as well as a “turning point in our pursuit of global economic recovery.”

However, the president cautioned that “in life there are no guarantees, and in economics there are no guarantees.”

Listen to the full audio of President Obama’s press conference after the G20 meeting:

Plans were released for a supervisory committee that can monitor problems in the global financial system. The summit did not, however, set out plans for any new or coordinated stimulus efforts, as President Obama and British Prime Minister Gordon Brown had called for prior to the meeting.

European powers including Germany and France had opposed such stimulus plans and advocated more regulation and reform of the system. French President Nicolas Sarkozy said the meeting and resulting pledges of new financial regulation were “beyond his expectations,” reported the Wall Street Journal.

Hedge funds considered “systemically important” will be subject to greater regulation, along with key financial instruments, markets and instruments, but not all investment funds as France and Germany had hoped.
As part of the strengthened regulatory frame work, there will be new global guidelines on the pay and bonuses of bankers, and a synchronized approach to handling so-called “toxic” assets held by banks.

The final communique outlines “tough new principles on pay and compensation and to support sustainable compensation schemes and the corporate social responsibility of all firms,” as part of its mandate.

France had demanded a list of tax havens be published, and the G20 agreed Thursday to ask the Organization for Economic Cooperation and Development to publish the list and to push for tougher sanctions for violators. China had opposed the idea of a published list prior to the meeting.

While no cooperative stimulus plan was approved and countires will maintain control of their own markets, the G20 sought broader cooperation.

“We have reached a new consensus that we take global actions together to deal with the problems we face,” British Prime Minister Gordon Brown told reporters after the talks, reported Bloomberg News. “There was substantial agreement on the need for us to do whatever is necessary to return to growth.”

During President Obama’s hour-long press conference, after his first international summit as president, he was asked about the diminished reputation of the United States.

“We’re starting to see some restoration of America’s standing in the world,” he responded. “I do not buy into the notion that America can’t lead in the world.”

The president said his willingness to look at U.S. regulatory failings enabled him to have a greater voice in producing the final communique drawn up during the London summit.

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