G-20 - The London Summit

The 20 largest economies (plus some other organizations, which means the London Summit wasn’t official a G-20 meeting) in the world met last Thursday, April 2, 2009 in London to discuss stability, growth, and jobs.  With the recession, all three topics are hot issues, as lack of stability in our current economy has turned growth negative, and taken many jobs with it.

The following list is what the leaders have agreed needs to be done to bring the world economy out of the current recession (as from the London Summit Site)

• restore confidence, growth, and jobs;
• repair the financial system to restore lending;
• strengthen financial regulation to rebuild trust;
• fund and reform our international financial institutions to overcome this crisis and prevent future ones;
• promote global trade and investment and reject protectionism, to underpin prosperity; and
• build an inclusive, green, and sustainable recovery.

Here is what was agreed to by the end of the summit (I have taken this all directly from the London Summit Site

1) To treble resources available to the IMF [International Monetary Fund] to $750 billion.

This is to help developing countries so the recession doesn’t completely negate the progress they have been making in past years.

2) To support a new SDR [Special Drawing Rights, a basket of currencies consisting of U.S. dollar, the Yen, and the Pound] allocation of $250 billion.

SDRs are credits that nations with balance of trade surpluses can ‘draw’ upon nations with balance of trade deficits.  This helps trade continue as exporting nations have confidence they will have receive the necessary funds (claims on SDRs) in the event that importing nations cannot make the appropriate payments.

3) To support at least $100 billion of additional lending by the MDBs [multilateral development banks lend money for projects in developing countries on five continents]

Similar to point 1.  Help developing countries who need money to finance their development.  If they could no longer gain access to loans, they would fall back on all their progress.

4) To ensure $250 billion of support for trade finance, and to use the additional resources from agreed IMF gold sales for concessional finance for the poorest countrie.

To help trade to continue throughout the world.  No one wants to see barriers to trade put up.

5) Constitute an additional $1.1 trillion programme of support to restore credit, growth and jobs in the world economy.

Lending needs to continue as currently it has slowed far too much.  Businesses and consumers take these loans and create jobs.  Without loans, these jobs cannot be created and the economy will continue to slump.

These are the 5 major agreements that came from the London Summit.  These are some large initiatives, which are all on top of what inidividual nations have already committed.  Hopefully with these agreements, the world economy will gain confidence, create sustainable jobs, and allow the process of developing worldwide prosperity to continue.  The key is a greener future where industries are sustainable, and consumers live within their means.  Let’s hope we can do it.