G20 to meet as expectations on reform, IMF and currencies mount
Leaders will be looking for common ground – and a new world economic structure. They're looking, too, for greater progress – than last year's Washington summit. This time there's an energetic public discussion of proposals before the meeting.
Russia's proposal of a new super reserve currency to replace the US dollar has already won backing from China. Roger Munnings, CEO and Chairman of KPMG Russia and the CIS says it reflects a desire to broaden the basis of international currencies beyond the vagaries of one economy.
“A super national reserve currency, which means that there would be a currency which would be used internationally, which wasn’t connected to one economy and therefore wasn’t tied to the fortunes of the good times and the bad times of one sole economy.”
Emerging markets are likely to play a greater role – their weak growth still looking positive compared with recession in many developed countries. In return, developing countries want more say on top organisations like the International Monetary Fund. Elina Ribakova, Chief Economist, of CitiGroup Russia believes changes to funding and representation at the IMF could be major outcomes of the summit.
“I think the most realistic that we can expect from the G20 is that recapitalisation, so to say, or re-funding to the IMF, and possibly to $500 – $750 Billion, increasing the total funds available. I think that’s very important, and if we get the specific of the increase out of the G20 meeting I think that will be major progress. Together with that, if we see an increase in quotas for the emerging markets in terms of the voting rights for the fund, I think that will also be a very positive signal, meaning that the bureaucracy of the institutions is changing and giving more weight to China, to Brazil, to Russia.”
Regulation is another issue. The financial markets already operate across global borders, often beyond the reach of national regulators. Catching up with the bankers – is certain to be a hot topic.