Reshaping the Global Financial Governance: the Challenges that the G20 Faces and Its Response

RDCY

11/03/2015

The origin and the development of the Group of Twenty (G20) is closely related to addressing the financial crisis through a mechanism of global governance. In 1999, the mechanism of the G20 Meeting of Finance Ministers and Central Bank Governors was set up to prevent the reoccurrence and spread of a crisis similar to the Asian financial crisis. In 2008, due to the "financial tsunami", the then French President Nicolas Sarkozy and British Prime Minister Gordon Brown suggested that the G20 be upgraded to a leaders summit, and the then US President George W. Bush agreed to organize it.

Since 2014, the signs of economic recovery in Europe and America have been positive. The sustainable growth of the global economy is expected to increase. Thus the role of the G20 in the global governance system needs repositioning. Meanwhile, the International Monetary Fund (IMF) faces difficulty in reform, the Group of 7 (G7) “expelled” Russia from the Group of Eight (G8), and all these challenge the G20 both internally and externally. And the challenges the G20 have exposed the dilemma confronting global governance.

The original intention for creating the G20, as stated by the then British Prime Minister Gordon Brown advocated in his speech at the second G20 summit in April of 2009, was to rebuild global prosperity through a “global ethic.” He said,“We believe that in this new global age our prosperity is indivisible. We believe that global problems require global solutions. We believe that for growth to be sustained it must be shared.” Both Mr. Brown and the then Prime Minister of Australia Kevin Rudd agreed that markets need morals. Globalization was shattered by the financial crisis, and should be rebuilt on our shared values.

As for the future mission of the G20 mechanism, US President Obama said in September of 2009 at the third G20 Summit held in Pittsburgh, “we can't wait for a crisis to cooperate. That's why our new framework will allow each of us to assess the others' policies, to build consensus on reform.” At the same summit, José Manuel Barroso, President of the European Commission said “it is time for the creation of a new global order reflecting the reality of economic interdependence.”

The G20 upholds its original intention and mission to lead the global economy to the path of recovery. We need to carry out research on how to stay on the right path and avoid moving backwards. This report deems China as a key factor to keep the G20 mechanism effective.

According to the communiqué released on the sixth G20 Summit held in Cannes, France, many countries hope China will host the 2016 G20 Summit. China, which has consistently adhered to the spirit of cooperation and development, mutual benefit and win-win collaboration, is willing to offer opportunities and room to all the countries for common development. We welcome everyone aboard China’s development train, and we would like to improve the governance order of the international economy with other countries...


Reshaping the Global Financial Governance: the Challenges that the G20 Faces and Its Response