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See also Statement of the G7 Finance Ministers and Central Bank Governors
I would like to make a few remarks on where we are on our broader agenda, and what we want to accomplish in these meetings.
We meet in the context of a severe downturn in the global economy. Without underestimating the challenges we still face, there are signs that the pace of deterioration in economic activity and trade flows has eased. Some measures of spending in the U.S. and other economies may have begun to stabilize. Financial conditions in some markets have shown modest improvement, and there are signs that U.S. housing markets are beginning to stabilize.
We are right to be somewhat encouraged, but we would be wrong to conclude that we are close to emerging from the darkness that descended on the global economy early last fall.
The origins of this crisis were a long period of increased borrowing and leverage and the breakdowns in many financial markets and institutions around the world. Crises that follow credit booms and originate in the collapse of financial systems tend to be more virulent and longer lasting. We do not have much experience with them on a global scale because such crises are once-in-several-generational events. Consequently, the clear imperative is to keep at implementing our shared agenda.
The G20 leaders came together in London earlier this month and agreed on a coordinated framework of policy actions with four key elements: (1) promotion of economic recovery, (2) repair of national financial systems, (3) support for the IMF, the World Bank, and the multilateral development banks (MDBs) in their efforts to mitigate the effects of the crisis, and (4) reforms that substantially reduce the odds that crises of this magnitude do not happen again.
We are making progress.
The first task ahead of us this weekend and in the weeks and months ahead is to implement the immediate London agenda of economic and financial repair.
Looking to the longer-term agenda, the difficult process of reform of national financial regulatory systems is already underway in the United States and many other countries. However, much remains to be done both nationally and internationally to create a system that is robust to shocks and abuses, and responsive to the needs and complexities of the 21st century.
Similarly, we must begin a process of comprehensive reform of all of the international financial institutions – the MDBs as well as the IMF – with the objective not just to reform them for the sake of saying we have done so but to bring about real change in their governance and increase their responsiveness, efficiency, and effectiveness.
This is a strong agenda for recovery and reform. When we reach the expansion phase of the coming economic cycle – which we will – the resulting global expansion must be more enduring than the one that ended catastrophically in 2008. The global expansion must be balanced – propelled by domestic demand growth in all major economies.
The members of the IMF and World Bank represented at these meetings share two principal objectives: early recovery from the current global economic and financial crisis and a significant strengthening of our common defenses against future crises. In recent months, we have joined together with unprecedented scope and scale toward these objectives.
Source: United States Treasury Department
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