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Pittsburgh
25 September 2009
The G20 summit will give emerging economies a larger role in the debate and decisions about global economic issues in the future. The gathering is also moving toward agreements to limit bonuses paid to bankers.
Group of 20 leaders, including Britain's Prime Minister Gordon Brown, agreed to shift economic issues that have traditionally been handled by the G7, a small group of wealthy nations, to the larger G20.
"The G20 will now be seen as the premier economic organization for dealing with issues of economic management around the world," Mr. Brown said.
The change moves the discussion from mostly western nations to the larger group that includes economies like China and India.
The change recognizes that these nations are a large and growing share of the world's economic output. Carnegie Mellon University Economics Professor Lester Lave says the economic crisis made the change urgent.
"Your people and your economy are being put at risk by nations that are not necessarily thinking about you or their good, so you would want to have more of a say in what is going on," he said.
Some G20 leaders say that there is progress toward putting limits on huge and controversial bonuses paid to bankers.
Professor Lave says the goal is to craft financial incentives that encourage bankers to consider the long term consequences of their investments, not just short term profits.
"In order to prevent the kind of speculation we saw in the past few years that really brought down the economy, what we need to do is manage the risks better," he said.
The deal may put some restraints on the bonuses that have been the target of a torrent of criticism, but the agreement may not include the absolute limits sought by European nations.
The group is also expected to approve new rules requiring that banks keep larger reserves to cover losses from bad loans.
Many G20 members have been trying to bolster their economies by cutting interest rates and raising spending on public works.
Prime Minister Brown says the economic recovery is still so fragile that leaders will continue stimulus efforts for a while. "We will agree that it is premature to remove the fiscal and monetary policy stimulus that exists, so that the economics can move forward," he said.
The two-day summit in Pittsburgh is the third meeting of G-20 leaders in less than a year as nations struggle to ease the recession.
The downturn pushed millions of people into unemployment around the world, cost trillions of dollars in lost wealth and massive amounts of government stimulus spending intended to jump-start economic growth.
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