Thursday, February 07, 2008


Can the G7/8 or the G20 solve the financial turmoil?

The G7 finance ministers meet on Friday. An editorial in the FT comments:

Dislocations in the financial system and a sharp US slowdown make it important for the G7 to show that, despite the differing interests of its members, it will be able to co-ordinate an international response if the economic need arises.

Two of the three issues likely to dominate the agenda – currencies and the US economy – are unlikely to produce much agreement. That makes some progress on the third – the lessons to be learned on financial regulation and stability – all the more important.

The US will ask its G7 partners to stimulate demand in order to offset its own slowdown. But it will be talking to the wrong people. Germany and Japan both have large current account surpluses, but Germany has barely achieved fiscal balance, while Japan’s government is still deep in the red. Neither will eagerly launch a fiscal stimulus. The elephant absent from the room is China.

China is a member of the G20, but nevertheless needs to be persuaded to take on a global leadership role.


From the European Council on Foreign Relations: What world order would China introduce?
Soon, the political struggle in the Communist Party will be seen as vital as the battle between the US presidential contenders; and protesters outside the World Bank will complain as much about the "Beijing Consensus" as they do about the "Washington Consensus".
Comments: Post a Comment

<< Home

This page is powered by Blogger. Isn't yours?