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http://www.g20.org/Documents/g20_declaration_en.pdf
THE G-20 TORONTO SUMMIT
DECLARATION
June 26 – 27, 2010
Preamble
1. In Toronto, we held our first Summit of the G-20 in its new capacity as the premier forum
for our international economic cooperation.
2. Building on our achievements in addressing the global economic crisis, we have agreed on
the next steps we should take to ensure a full return to growth with quality jobs, to reform
and strengthen financial systems, and to create strong, sustainable and balanced global
growth.
3. Our efforts to date have borne good results. Unprecedented and globally coordinated fiscal
and monetary stimulus is playing a major role in helping to restore private demand and
lending. We are taking strong steps toward increasing the stability and strength of our
financial systems. Significantly increased resources for international financial institutions
are helping stabilise and address the impact of the crisis on the world’s most vulnerable.
Ongoing governance and management reforms, which must be completed, will also enhance
the effectiveness and relevance of these institutions. We have successfully maintained our
strong commitment to resist protectionism.
4. But serious challenges remain. While growth is returning, the recovery is uneven and
fragile, unemployment in many countries remains at unacceptable levels, and the social
impact of the crisis is still widely felt. Strengthening the recovery is key. To sustain
recovery, we need to follow through on delivering existing stimulus plans, while working to
create the conditions for robust private demand. At the same time, recent events highlight
the importance of sustainable public finances and the need for our countries to put in place
credible, properly phased and growth-friendly plans to deliver fiscal sustainability,
differentiated for and tailored to national circumstances. Those countries with serious fiscal
challenges need to accelerate the pace of consolidation. This should be combined with
efforts to rebalance global demand to help ensure global growth continues on a sustainable
path. Further progress is also required on financial repair and reform to increase the
transparency and strengthen the balance sheets of our financial institutions, and support
credit availability and rapid growth, including in the real economy. We took new steps to
build a better regulated and more resilient financial system that serves the needs of our
citizens. There is also a pressing need to complete the reforms of the international financial
institutions.
5. Recognizing the importance of achieving strong job growth and providing social protection
to our citizens, particularly our most vulnerable, we welcome the recommendations of our
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Labour and Employment Ministers, who met in April 2010, and the training strategy
prepared by the International Labour Organization (ILO) in collaboration with the
Organisation for Economic Co-operation and Development (OECD).
6. We are determined to be accountable for the commitments we have made, and have
instructed our Ministers and officials to take all necessary steps to implement them fully
within agreed timelines.
The Framework for Strong, Sustainable and Balanced Growth
7. The G-20’s highest priority is to safeguard and strengthen the recovery and lay the
foundation for strong, sustainable and balanced growth, and strengthen our financial systems
against risks. We therefore welcome the actions taken and commitments made by a number
of G-20 countries to boost demand and rebalance growth, strengthen our public finances,
and make our financial systems stronger and more transparent. These measures represent
substantial contributions to our collective well-being and build on previous actions. We will
continue to co-operate and undertake appropriate actions to bolster economic growth and
foster a strong and lasting recovery.
8. The Framework for Strong, Sustainable and Balanced Growth that we launched in
Pittsburgh is the means to achieving our shared objectives, by assessing the collective
consistency of policy actions and strengthening policy frameworks.
9. We have completed the first stage of our Mutual Assessment Process and we concluded that
we can do much better. The IMF and World Bank estimate that if we choose a more
ambitious path of reforms, over the medium term:
· global output would be higher by almost $4 trillion;
· tens of millions more jobs would be created;
· even more people would be lifted out of poverty; and
· global imbalances would be significantly reduced.
Increasing global growth on a sustainable basis is the most important step we can take in
improving the lives of all of our citizens, including those in the poorest countries.
10. We are committed to taking concerted actions to sustain the recovery, create jobs and to
achieve stronger, more sustainable and more balanced growth. These will be differentiated
and tailored to national circumstances. We agreed today on:
· Following through on fiscal stimulus and communicating “growth friendly” fiscal
consolidation plans in advanced countries that will be implemented going forward.
Sound fiscal finances are essential to sustain recovery, provide flexibility to respond
to new shocks, ensure the capacity to meet the challenges of aging populations, and
avoid leaving future generations with a legacy of deficits and debt. The path of
adjustment must be carefully calibrated to sustain the recovery in private demand.
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There is a risk that synchronized fiscal adjustment across several major economies
could adversely impact the recovery. There is also a risk that the failure to implement
consolidation where necessary would undermine confidence and hamper growth.
Reflecting this balance, advanced economies have committed to fiscal plans that will
at least halve deficits by 2013 and stabilize or reduce government debt-to-GDP ratios
by 2016. Recognizing the circumstances of Japan, we welcome the Japanese
government’s fiscal consolidation plan announced recently with their growth strategy.
Those with serious fiscal challenges need to accelerate the pace of consolidation.
Fiscal consolidation plans will be credible, clearly communicated, differentiated to
national circumstances, and focused on measures to foster economic growth.
· Strengthening social safety nets, enhancing corporate governance reform, financial
market development, infrastructure spending, and greater exchange rate flexibility in
some emerging markets;
· Pursuing structural reforms across the entire G-20 membership to increase and sustain
our growth prospects; and
· Making more progress on rebalancing global demand.
Monetary policy will continue to be appropriate to achieve price stability and thereby
contribute to the recovery.
11. Advanced deficit countries should take actions to boost national savings while maintaining
open markets and enhancing export competitiveness.
12. Surplus economies will undertake reforms to reduce their reliance on external demand and
focus more on domestic sources of growth.
13. We are committed to narrowing the development gap and that we must consider the impact
of our policy actions on low-income countries. We will continue to support development
financing, including through new approaches that encourage development financing from
both public and private sources.
14. We recognize that these measures will need to be implemented at the national level and will
need to be tailored to individual country circumstances. To facilitate this process, we have
agreed that the second stage of our country-led and consultative mutual assessment will be
conducted at the country and European level and that we will each identify additional
measures, as necessary, that we will take toward achieving strong, sustainable, and balanced
growth.
Financial Sector Reform
15. We are building a more resilient financial system that serves the needs of our economies,
reduces moral hazard, limits the build up of systemic risk, and supports strong and stable
economic growth. We have strengthened the global financial system by fortifying
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prudential oversight, improving risk management, promoting transparency, and reinforcing
international cooperation. A great deal has been accomplished. We welcome the full
implementation of the European Stabilization Mechanism and Facility, the EU decision to
publicly release the results of ongoing tests on European banks, and the recent US financial
reform bill.
-16. But more work is required. Accordingly, we pledge to act together to achieve the
commitments to reform the financial sector made at the Washington, London and Pittsburgh
Summits by the agreed or accelerated timeframes. The transition to new standards will take
into account the cumulative macroeconomic impact of the reforms in advanced and emerging
economies. We are committed to international assessment and peer review to ensure that all
our decisions are fully implemented.
17. Our reform agenda rests on four pillars.
18. The first pillar is a strong regulatory framework. We took stock of the progress of the Basel
Committee on Banking Supervision (BCBS) towards a new global regime for bank capital
and liquidity and we welcome and support its work. Substantial progress has been made on
reforms that will materially raise levels of resilience of our banking systems. The amount of
capital will be significantly higher and the quality of capital will be significantly improved
when the new reforms are fully implemented. This will enable banks to withstand – without
extraordinary government support – stresses of a magnitude associated with the recent
financial crisis. We support reaching agreement at the time of the Seoul Summit on the new
capital framework. We agreed that all members will adopt the new standards and these will
be phased in over a timeframe that is consistent with sustained recovery and limits market
disruption, with the aim of implementation by end-2012, and a transition horizon informed
by the macroeconomic impact assessment of the Financial Stability Board (FSB) and BCBS.
Phase-in arrangements will reflect different national starting points and circumstances, with
initial variance around the new standards narrowing over time as countries converge to the
new global standard.
19. We agreed to strengthen financial market infrastructure by accelerating the implementation
of strong measures to improve transparency and regulatory oversight of hedge funds, credit
rating agencies and over-the-counter derivatives in an internationally consistent and nondiscriminatory
way. We re-emphasized the importance of achieving a single set of high
quality improved global accounting standards and the implementation of the FSB’s
standards for sound compensation.
20. The second pillar is effective supervision. We agreed that new, stronger rules must be
complemented with more effective oversight and supervision. We tasked the FSB, in
consultation with the IMF, to report to our Finance Ministers and Central Bank Governors in
October 2010 on recommendations to strengthen oversight and supervision, specifically
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relating to the mandate, capacity and resourcing of supervisors and specific powers which
should be adopted to proactively identify and address risks, including early intervention.
21. The third pillar is resolution and addressing systemic institutions. We are committed to
design and implement a system where we have the powers and tools to restructure or resolve
all types of financial institutions in crisis, without taxpayers ultimately bearing the burden,
and adopted principles that will guide implementation. We called upon the FSB to consider
and develop concrete policy recommendations to effectively address problems associated
with, and resolve, systemically important financial institutions by the Seoul Summit. To
reduce moral hazard risks, there is a need to have a policy framework including effective
resolution tools, strengthened prudential and supervisory requirements, and core financial
market infrastructures. We agreed the financial sector should make a fair and substantial
contribution towards paying for any burdens associated with government interventions,
where they occur, to repair the financial system or fund resolution, and reduce risks from the
financial system. We recognized that there are a range of policy approaches to this end.
Some countries are pursuing a financial levy. Other countries are pursuing different
approaches.
22. The fourth pillar is transparent international assessment and peer review. We have
strengthened our commitment to the IMF/World Bank Financial Sector Assessment
Program (FSAP) and pledge to support robust and transparent peer review through the FSB.
We are addressing non-cooperative jurisdictions based on comprehensive, consistent, and
transparent assessment with respect to tax havens, the fight against money laundering and
terrorist financing and the adherence to prudential standards.
International Financial Institutions and Development
23. The International Financial Institutions (IFIs) have been a central part of the global response
to the financial and economic crisis, mobilizing critical financing, including $750 billion by
the IMF and $235 billion by the Multilateral Development Banks (MDBs). This has
underscored the value of these institutions as platforms for our global cooperation.
24. We commit to strengthening the legitimacy, credibility and effectiveness of the IFIs to make
them even stronger partners for us in the future.
25. Towards this end, we have fulfilled our Pittsburgh Summit commitment on the MDBs. This
includes $350 billion in capital increases for the MDBs, allowing them to nearly double
their lending. This new capital is joined to ongoing and important reforms to make these
institutions more transparent, accountable and effective, and to strengthen their focus on
lifting the lives of the poor, underwriting growth, and addressing climate change and food
security.
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26. We will fulfill our commitment to ensure an ambitious replenishment for the concessional
lending facilities of the MDBs, especially the International Development Association and
the African Development Fund.
27. We have endorsed the important voice reforms agreed by shareholders at the World Bank,
which will increase the voting power of developing and transition countries by 4.59% since
2008.
28. We underscore our resolve to ensure ratification of the 2008 IMF Quota and Voice Reforms
and expansion of the New Arrangements to Borrow (NAB).
29. We called for an acceleration of the substantial work still needed for the IMF to complete
the quota reform by the Seoul Summit and in parallel deliver on other governance reforms,
in line with commitments made in Pittsburgh.
30. Today we build on our earlier commitment to open, transparent and merit-based selection
processes for the heads and senior leadership of all the IFIs. We will strengthen the selection
processes in the lead up to the Seoul Summit in the context of broader reform.
31. We agreed to task our Finance Ministers and Central Bank Governors to prepare policy
options to strengthen global financial safety nets for our consideration at the Seoul Summit.
Our goal is to build a more stable and resilient international monetary system.
32. We stand united with the people of Haiti and are providing much-needed reconstruction
assistance, including the full cancellation of all of Haiti’s IFI debt. We welcome the
launching of the Haiti Reconstruction Fund.
33. We have launched the SME Finance Challenge and commit to mobilizing funding for
implementation of winning proposals, including through the strong support of the MDBs.
We have developed a set of principles for innovative financial inclusion.
34. We welcome the launch of the Global Agriculture and Food Security Program in fulfillment
of our Pittsburgh commitment on food security, an important step to further implement the
Global Partnership for Agriculture and Food Security, and invite further contributions.
Looking ahead, we commit to exploring innovative, results-based mechanisms to harness
the private sector for agricultural innovation. We call for the full implementation of the
L’Aquila Initiative and the application of its principles.
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Fighting Protectionism and Promoting Trade and Investment
35. While the global economic crisis led to the sharpest decline of trade in more than seventy
years, G-20 countries chose to keep markets open to the opportunities that trade and
investment offer. It was the right choice.
36. As such, we renew for a further three years, until the end of 2013, our commitment to
refrain from raising barriers or imposing new barriers to investment or trade in goods and
services, imposing new export restrictions or implementing World Trade Organization
(WTO)-inconsistent measures to stimulate exports, and commit to rectify such measures as
they arise. We will minimize any negative impact on trade and investment of our domestic
policy actions, including fiscal policy and action to support the financial sector. We ask the
WTO, OECD and UNCTAD to continue to monitor the situation within their respective
mandates, reporting publicly on these commitments on a quarterly basis.
37. Open markets play a pivotal role in supporting growth and job creation, and in achieving our
goals under the G-20 Framework for Strong, Sustainable and Balanced Growth. We ask the
OECD, the ILO, World Bank, and the WTO to report on the benefits of trade liberalization
for employment and growth at the Seoul Summit.
38. We therefore reiterate our support for bringing the WTO Doha Development Round to a
balanced and ambitious conclusion as soon as possible, consistent with its mandate and
based on the progress already made. We direct our representatives, using all negotiating
avenues, to pursue this objective, and to report on progress at our next meeting in Seoul,
where we will discuss the status of the negotiations and the way forward.
39. We commit to maintain momentum for Aid for Trade. We also ask international agencies,
including the World Bank and other Multilateral Development Banks to step up their
capacity and support trade facilitation which will boost world trade.
Other Issues and Forward Agenda
40. We agree that corruption threatens the integrity of markets, undermines fair competition,
distorts resource allocation, destroys public trust and undermines the rule of law. We call
for the ratification and full implementation by all G-20 members of the United Nations
Convention against Corruption (UNCAC) and encourage others to do the same. We will
fully implement the reviews in accordance with the provisions of UNCAC. Building on the
progress made since Pittsburgh to address corruption, we agree to establish a Working
Group to make comprehensive recommendations for consideration by Leaders in Korea on
how the G-20 could continue to make practical and valuable contributions to international
efforts to combat corruption and lead by example, in key areas that include, but are not
limited to, adopting and enforcing strong and effective anti-bribery rules, fighting corruption
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in the public and private sectors, preventing access of corrupt persons to global financial
systems, cooperation in visa denial, extradition and asset recovery, and protecting
whistleblowers who stand-up against corruption.
41. We reiterate our commitment to a green recovery and to sustainable global growth. Those of
us who have associated with the Copenhagen Accord reaffirm our support for it and its
implementation and call on others to associate with it. We are committed to engage in
negotiations under the UNFCCC on the basis of its objective provisions and principles
including common but differentiated responsibilities and respective capabilities and are
determined to ensure a successful outcome through an inclusive process at the Cancun
Conferences. We thank Mexico for undertaking to host the sixteenth Conference of the
Parties (COP 16) in Cancun from November 29 to December 20, 2010 and express our
appreciation for its efforts to facilitate negotiations. We look forward to the outcome of the
UN Secretary-General’s High-Level Advisory Group on Climate Change Financing which
is, inter alia, exploring innovative financing.
42. We note with appreciation the report on energy subsidies from the International Energy
Agency (IEA), Organization of the Petroleum Exporting Countries (OPEC), OECD and
World Bank. We welcome the work of Finance and Energy Ministers in delivering
implementation strategies and timeframes, based on national circumstances, for the
rationalization and phase out over the medium term of inefficient fossil fuel subsidies that
encourage wasteful consumption, taking into account vulnerable groups and their
development needs. We also encourage continued and full implementation of countryspecific
strategies and will continue to review progress towards this commitment at
upcoming summits.
43. Following the recent oil spill in the Gulf of Mexico we recognize the need to share best
practices to protect the marine environment, prevent accidents related to offshore
exploration and development, as well as transportation, and deal with their consequences.
44. We recognize that 2010 marks an important year for development issues. The September
2010 Millennium Development Goals (MDG) High Level Plenary will be a crucial
opportunity to reaffirm the global development agenda and global partnership, to agree on
actions for all to achieve the MDGs by 2015, and to reaffirm our respective commitments to
assist the poorest countries.
45. In this regard it is important to work with Least Developed Countries (LDCs) to make them
active participants in and beneficiaries of the global economic system. Accordingly we
thank Turkey for its decision to host the 4th United Nations Conference on the LDCs in June
2011.
46. We welcome the Global Pulse Initiative interim report and look forward to an update.
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47. Narrowing the development gap and reducing poverty are integral to our broader objective
of achieving strong, sustainable and balanced growth and ensuring a more robust and
resilient global economy for all. In this regard, we agree to establish a Working Group on
Development and mandate it to elaborate, consistent with the G-20’s focus on measures to
promote economic growth and resilience, a development agenda and multi-year action plans
to be adopted at the Seoul Summit.
48. We will meet next in Seoul, Korea, on November 11-12, 2010. We will convene in
November 2011 under the Chairmanship of France and in 2012 under the Chairmanship of
Mexico.
49. We thank Canada for hosting the successful Toronto Summit.
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ANNEX I
The Framework for Strong, Sustainable and Balanced Growth
1. As a result of the extraordinary and highly coordinated policy actions agreed to at the
Washington, London and Pittsburgh G-20 Summits, the global economy is recovering faster
than was expected. Our decisive and unprecedented actions over the past two years have
limited the downturn and spurred recovery.
2. Yet risks remain. Unemployment remains unacceptably high in many G-20 economies. The
recovery is uneven across G-20 members both across advanced economies and between
advanced and emerging economies. This poses risks to the continued economic expansion.
There is a risk that global current account imbalances will widen again, absent further policy
action. While considerable progress has been made in moving ahead on our financial sector
repair and reform agenda, financial markets remain fragile and credit flows restrained.
Concerns over large fiscal deficits and rising debt levels in some countries have also become
a source of uncertainty and financial market volatility.
3. The G-20’s highest priority is to safeguard and strengthen the recovery and lay the
foundation for strong, sustainable and balanced growth, including strengthening our
financial systems against risks. We therefore welcome the actions taken and commitments
made by a number of G-20 countries. Among more recent measures, we particularly
welcome the full implementation of the European Financial Stability Mechanism and
Facility; the EU decision to publicly release the results of ongoing tests on European banks;
and the recent announcements of fiscal consolidation plans and targets by a number of G-20
countries. These represent substantial contributions to our collective well-being and build on
our previous actions. We will continue to cooperate and undertake appropriate actions to
bolster economic growth and foster a strong and lasting recovery.
4. The Framework for Strong, Sustainable and Balanced Growth we launched in Pittsburgh is
the means to achieving our shared objectives. G-20 members have a responsibility to the
community of nations to assure the overall health of the global economy. We committed to
assess the collective consistency of our policy actions and to strengthen our policy
frameworks in order to meet our common objectives. Through our collective policy action,
we will ensure growth is sustained, more balanced, shared across all countries and regions
of the world, and consistent with our development goals.
5. We have completed the first stage of our Mutual Assessment Process. As we requested in
Pittsburgh, G-20 Finance Ministers and Central Bank Governors, with the support of the
IMF, World Bank, OECD, ILO and other international organisations, have assessed the
collective consistency of our individual policy frameworks and global prospects under
alternative policy scenarios.
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6. The assessment is that in the absence of a coordinated policy response: global output is
likely to remain below its pre-crisis trend; unemployment remains above pre-crisis levels in
most countries; fiscal deficits and debt in some advanced economies reach unacceptably
high levels; and, global current account imbalances, which narrowed during the crisis, widen
again. Moreover, this outlook is subject to considerable downside risks.
7. We concluded that we can do much better. The IMF and World Bank estimate that if we
choose a more ambitious path of reforms, over the medium term, we could:
· raise global output by up to $4 trillion;
· create an estimated 52 million jobs;
· lift up to 90 million people out of poverty; and
· significantly reduce global current account balances.
If we act in a coordinated manner, all regions are better off, now and in the future.
Moreover, increasing global growth on a sustainable basis is the most important step we can
take in improving the lives of all, including those in the poorest countries.
8. We are committed to taking concerted actions to sustain the recovery, create jobs and to
achieve stronger, more sustainable and more balanced growth. These will be differentiated
and tailored to national circumstances. We agreed today on:
· Following through on fiscal stimulus and communicating “growth-friendly” fiscal
consolidation plans in advanced countries and that will be implemented going
forward;
· strengthening social safety nets, enhancing corporate governance reform, financial
market development, infrastructure spending, and increasing exchange rate flexibility
in some emerging markets;
· pursuing structural reforms across the entire G-20 membership to increase and sustain
our growth prospects; and
· Making further progress on rebalancing global demand.
Monetary policy will continue to be appropriate to achieve price stability and thereby
contribute to the recovery.
9. We agreed to follow through on fiscal stimulus and communicating “growth friendly” fiscal
consolidation plans in advanced countries that will be implemented going forward. Sound
fiscal finances are essential to sustain recovery, provide flexibility to respond to new shocks,
ensure the capacity to meet the challenges of aging populations, and avoid leaving future
generations with a legacy of deficits and debt. The path of adjustment must be carefully
calibrated to sustain the recovery in private demand. There is a risk that synchronized fiscal
adjustment across several major economies could adversely impact the recovery. There is
also a risk that the failure to implement consolidation where necessary would undermine
confidence and hamper growth. Reflecting this balance, advanced economies have
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committed to fiscal plans that will at least halve deficits by 2013 and stabilize or reduce
government debt-to-GDP ratios by 2016. Recognizing the circumstances of Japan, we
welcome the Japanese government’s fiscal consolidation plan announced recently with their
growth strategy. Those with serious fiscal challenges need to accelerate the pace of
consolidation. Fiscal consolidation plans will be credible, clearly communicated,
differentiated to national circumstances, and focused on measures to foster economic
growth.
10. We have agreed on a set of principles to guide these fiscal consolidation plans by advanced
economies:
· Fiscal consolidation plans will be credible. They will be based on prudent
assumptions with respect to economic growth and our respective fiscal positions, and
they will identify specific measures to achieve a target path that ensures fiscal
sustainability. Strengthened budgetary frameworks and institutions can help underpin
the credibility of consolidation strategies.
· The time to communicate our medium-term fiscal plans is now. We will elaborate
clear and credible plans that put our fiscal finances on a sustainable footing. The
speed and timing of withdrawing fiscal stimulus and reducing deficits and debt will
be differentiated for and tailored to national circumstances, and the needs of the
global economy. However, it is clear that consolidation will need to begin in
advanced economies in 2011, and earlier for countries experiencing significant fiscal
challenges at present.
· Fiscal consolidation will focus on measures that will foster economic growth. We
will look at ways to use our fiscal resources more efficiently, to help reduce the
overall cost of our interventions while targeting resources to where they are most
needed. In addition, we will focus on structural reforms that will promote long-term
growth.
11. Advanced deficit countries should take actions to boost national savings while maintaining
open markets and enhancing export competitiveness.
12. Surplus economies will undertake reforms to reduce their reliance on the external demand
and focus more on domestic sources of growth. This will help strengthen their resilience to
external shocks and promote more stable growth. To do this, advanced surplus economies
will focus on structural reforms that support increased domestic demand. Emerging surplus
economies will undertake reforms tailored to country circumstances to:
· Strengthen social safety nets (such as public health care and pension plans),
corporate governance and financial market development to help reduce precautionary
savings and stimulate private spending;
· Increase infrastructure spending to help boost productive capacity and reduce supply
bottlenecks; and
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· Enhance exchange rate flexibility to reflect underlying economic fundamentals.
Excess volatility and disorderly movements in exchange rates can have adverse
implications for economic and financial stability. Market-oriented exchange rates that
reflect underlying economic fundamentals contribute to global economic stability.
13. Across all G-20 members, we recognise that structural reforms can have a substantial impact
on economic growth and global welfare. We will implement measures that will enhance the
growth potential of our economies in a manner that pays particular attention to the most
vulnerable. Reforms could support the broadly-shared expansion of demand if wages grow
in line with productivity. It will be important to strike the right balance between policies that
support greater market competition and economic growth and policies that preserve social
safety nets consistent with national circumstances. Together these measures will also help
unlock demand. These include:
· Product, service and labour market reforms in advanced economies, particularly those
economies that may have lost some productive capacity during the crisis. Labour
market reforms might include: better targeted unemployment benefits and more
effective active labour market policies (such as job retraining, job search and skills
development programs, and raising labour mobility). It might also include putting in
place the right conditions for wage bargaining systems to support employment.
Product and service market reforms might include strengthening competition in the
service sector; reducing barriers to competition in network industries, professional
services and retail sectors, encouraging innovation and further reducing the barriers to
foreign competition.
· Reducing restrictions on labour mobility, enhancing foreign investment opportunities
and simplifying product market regulation in emerging market economies.
· Avoiding new protectionist measures.
· Completing the Doha Round to accelerate global growth through trade flows. Open
trade will yield significant benefits for all and can facilitate global rebalancing.
· Actions to accelerate financial repair and reform. Weaknesses in financial sector
regulation and supervision in advanced economies led to the recent crisis. We will
implement the G-20 financial reform agenda and ensure a stronger financial system
serves the needs of the real economy. While not at the centre of the crisis, financial
sectors in some emerging economies need to be developed further so that they can
provide the depth and breadth of services required to promote and sustain high rates
of economic growth and development. It is important that financial reforms in
advanced economies take into account any adverse effects on financial flows to
emerging and developing economies. Vigilance is also needed to ensure open capital
markets and avoid financial protectionism.
14. We welcome the recommendations of our Labour and Employment Ministers, who met in
April 2010, on the employment impacts of the global economic crisis. We reaffirm our
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commitment to achieving strong job growth and providing social protection to our most
vulnerable citizens. An effective employment policy should place quality jobs at the heart
of the recovery. We appreciate the work done by the International Labour Organization in
collaboration with the OECD on a training strategy that will help equip the workforce with
the skills required for the jobs of today and those of tomorrow.
15. We are committed to narrowing the development gap and that we must consider the impact
of our policy actions on low-income countries. We will continue support development
financing, including through new approaches that encourage development financing from
both public and private sources. The crisis will have long lasting impact on the development
trajectories of poor countries in every region of the world. Among these effects, developing
countries are likely to face increased challenges in securing financing from both public and
private sources. Many of us have already taken steps to help address this shortfall by
implementing innovative approaches to financing, such as advance market commitments,
the SME challenge and recent progress with respect to financial inclusion. Low-income
countries have the potential to contribute to stronger and more balanced global growth, and
should be viewed as markets for investment.
16. These measures need to be implemented at the national level and tailored to individual
country circumstances. We welcome additional measures announced by some G-20
members aimed at meeting our shared objectives.
17. To facilitate this process, the second stage of our country-led, consultative mutual
assessment will be conducted at the country and European level. Each G-20 member will
identify the measures it is taking to implement the policies we have agreed upon today to
ensure stronger, more sustainable and balanced growth. We ask our Finance Ministers and
Central Bank Governors to elaborate on these measures and report on them when we next
meet. We will continue to draw on the expertise of the IMF, World Bank, OECD, ILO and
other international organisations, as necessary. These measures will form the basis of our
comprehensive action plan that will be announced in the Seoul Summit. As we pursue
strong, sustainable and more balanced growth, we continue to encourage work on
measurement methods to take into account social and environmental dimensions of
economic development.
18. The policy commitments we are making today, along with the significant policy measures
we have already taken, will allow us to reach our objective of strong, sustainable and
balanced growth, the benefits of which will be felt both within the G-20 and across the
globe.
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ANNEX II
Financial Sector Reform
1. The financial crisis has imposed huge costs. This must not be allowed to happen again. The
recent financial volatility has strengthened our resolve to work together to complete
financial repair and reform. We need to build a more resilient financial system that serves
the needs of our economies, reduces moral hazard, limits the build-up of systemic risk and
supports strong and stable economic growth.
2. Collectively we have made considerable progress toward strengthening the global financial
system by fortifying prudential oversight, improving risk management, promoting
transparency and continuously reinforcing international cooperation. We welcome the
strong financial regulatory reform bill in the United States.
3. But there is more to be done. Further repair to the financial sector is critical to achieving
sustainable global economic recovery. More work is required to restore the soundness and
enhance the transparency of banks’ balance sheets and markets; and improve the corporate
governance and risk management of financial firms in order to strengthen the global
financial system and restore the credit needed to fuel sustainable economic growth. We
welcome the decision of EU leaders to publish the results of ongoing tests on European
banks to reassure markets of the resilience and transparency of the European banking
system.
4. We pledge to act together to achieve the commitments to reform the financial sector made at
the Washington, London and Pittsburgh Summits by the agreed or accelerated timeframes.
Transition horizons will take into account the cumulative macroeconomic impact of the
reforms in advanced and emerging economies
Capital and Liquidity
5. We agreed that the core of the financial sector reform agenda rests on improving the
strength of capital and liquidity and discouraging excessive leverage. We agreed to increase
the quality, quantity, and international consistency of capital, to strengthen liquidity
standards, to discourage excessive leverage and risk taking, and reduce procyclicality.
6. We took stock of the progress of the Basel Committee on Banking Supervision (BCBS)
towards a new global regime for bank capital and liquidity and we welcome and support its
work. Substantial progress has been made on reforms that will materially raise levels of
resilience of our banking systems.
· The amount of capital will be significantly higher when the new reforms are fully
implemented.
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· The quality of capital will be significantly improved to reinforce banks’ ability to
absorb losses.
7. We support reaching agreement, at the time of the Seoul Summit, on a new capital
framework that would raise capital requirements by:
· establishing a new requirement that each bank hold in Tier 1 capital, at a minimum,
an increasing share of common equity, after deductions, measured as a percentage of
risk-weighted assets, that enables them to withstand with going concern fully-lossabsorbing
capital – without extraordinary government support – stresses of a
magnitude associated with the recent financial crisis.
· moving to a globally consistent and transparent set of conservative deductions
generally applied at the level of common equity, or its equivalent in the case of nonjoint
stock companies, over a suitable globally-consistent transition period.
8. Based on our agreement at the Pittsburgh Summit that Basel II will be adopted in all major
centers by 2011, we agreed that all members will adopt the new standards and these will be
phased in over a timeframe that is consistent with sustained recovery and limits market
disruption, with the aim of implementation by end-2012, and a transition horizon informed
by the macroeconomic impact assessment of the Financial Stability Board (FSB) and BCBS.
9. Phase-in arrangements will reflect different national starting points and circumstances, with
initial variance around the new standards narrowing over time as countries converge to the
new global standard. Existing public sector capital injections will be grandfathered for the
extent of the transition.
10. We reiterated support for the introduction of a leverage ratio as a supplementary measure to
the Basel II risk-based framework with a view to migrating to Pillar I treatment after an
appropriate transition period based on appropriate review and calibration. To ensure
comparability, the details of the leverage ratio will be harmonized internationally, fully
adjusting for differences in accounting.
11. We acknowledged the importance of the quantitative impact study currently being
conducted by the BCBS that measures the potential impact of the new Basel standards and
will ensure that the new capital and liquidity standards are of high quality and adequately
calibrated. The BCBS- FSB macroeconomic impact study will inform the development of
the phase-in period of the new standards.
12. We welcomed the BCBS agreement on a coordinated start date not later than 31 December
2011 for all elements of the revised trading book rules.
13. We support the BCBS’ work to consider the role of contingent capital in strengthening
market discipline and helping to bring about a financial system where the private sector
17
fully bears the losses on their investments. Consideration of contingent capital should be
included as part of the 2010 reform package.
14. We called upon the FSB and the BCBS to report on progress of the full package of reform
measures by the Seoul Summit. We recognize the critical role of the financial sector in
driving a robust economy. We are committed to design a financial system which is resilient,
stable and ensures the continued availability of credit.
More Intensive Supervision
15. We agreed that new, stronger rules must be complemented with more effective oversight
and supervision. We are committed to the Basel Committee’s Core Principles for Effective
Banking Supervision and tasked the FSB, in consultation with the International Monetary
Fund (IMF), to report to our Finance Ministers and Central Bank Governors in October
2010 on recommendations to strengthen oversight and supervision, specifically relating to
the mandate, capacity and resourcing of supervisors and specific powers which should be
adopted to proactively identify and address risks, including early intervention.
Resolution of Financial Institutions
16. We are following through on our commitment to reduce moral hazard in the financial
system. We are committed to design and implement a system where we have the powers
and tools to restructure or resolve all types of financial institutions in crisis, without
taxpayers ultimately bearing the burden. These powers should facilitate “going concern”
capital and liquidity restructuring as well as “gone concern” restructuring and wind-down
measures. We endorsed and have committed to implement our domestic resolution powers
and tools in a manner that preserves financial stability and are committed to implement the
ten key recommendations on cross-border bank resolution issued by the BCBS in March
2010. In this regard, we support changes to national resolution and insolvency processes and
laws where needed to provide the relevant national authorities with the capacity to cooperate
and coordinate resolution actions across borders.
17. We agree that resolution regimes should provide for:
· Proper allocation of losses to reduce moral hazard and protect taxpayers;
· Continuity of critical financial services, including uninterrupted service for insured
depositors;
· Credibility of the resolution regime in the market;
· Minimization of contagion;
· Advanced planning for orderly resolution and transfer of contractual relationships;
and,
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· Effective cooperation and information exchange domestically and among
jurisdictions in the event of a failure of a cross-border institution.
Addressing Systemically Important Financial Institutions
18. We welcomed the FSB’s interim report on reducing the moral hazard risks posed by
systemically important financial institutions. We recognized that more must be done to
address these risks. Prudential requirements for such firms should be commensurate with the
cost of their failure. We called upon the FSB to consider and develop concrete policy
recommendations to effectively address problems associated with and resolve systemically
important financial institutions by the Seoul Summit. This should include more intensive
supervision along with consideration of financial instruments and mechanisms to encourage
market discipline, including contingent capital, bail-in options, surcharges, levies, structural
constraints, and methods to haircut unsecured creditors.
19. We welcomed the substantial progress that has been made regarding the development of
supervisory colleges and crisis management groups for the major complex financial
institutions identified by the FSB.
20. We continue to work together to develop robust agreed-upon institution-specific recovery
and rapid resolution plans for major cross-border institutions by the end of 2010. We further
committed to continue working on ensuring cooperation among jurisdictions in financial
institution resolution proceedings.
Financial Sector Responsibility
21. We agreed the financial sector should make a fair and substantial contribution towards
paying for any burdens associated with government interventions, where they occur, to
repair the financial system or fund resolution.
22. To that end, we recognized that there is a range of policy approaches. Some countries are
pursuing a financial levy. Other countries are pursuing different approaches. We agreed the
range of approaches would follow these principles:
· Protect taxpayers;
· Reduce risks from the financial system;
· Protect the flow of credit in good times and bad times;
· Take into account individual countries’ circumstances and options; and,
· Help promote a level playing field.
23. We thanked the IMF for its work in this area.
19
Financial Market Infrastructure and Scope of Regulation
24. We agreed on the need to strengthen financial market infrastructure in order to reduce
systemic risk, improve market efficiency, transparency and integrity. Global action is
important to minimize regulatory arbitrage, promote a level playing field, and foster the
widespread application of the principles of propriety, integrity, and transparency.
25. We pledged to work in a coordinated manner to accelerate the implementation of over-thecounter
(OTC) derivatives regulation and supervision and to increase transparency and
standardization. We reaffirm our commitment to trade all standardized OTC derivatives
contracts on exchanges or electronic trading platforms, where appropriate, and clear through
central counterparties (CCPs) by end-2012 at the latest. OTC derivative contracts should be
reported to trade repositories (TRs). We will work towards the establishment of CCPs and
TRs in line with global standards and ensure that national regulators and supervisors have
access to all relevant information. In addition we agreed to pursue policy measures with
respect to haircut-setting and margining practices for securities financing and OTC
derivatives transactions that will reduce procyclicality and enhance financial market
resilience. We recognized that much work has been done in this area. We will continue to
support further progress in implementing these measures.
26. We committed to accelerate the implementation of strong measures to improve transparency
and regulatory oversight of hedge funds, credit rating agencies and over-the-counter
derivatives in an internationally consistent and non-discriminatory way. We also committed
to improve the functioning and transparency of commodities markets. We call on credit
rating agencies to increase transparency and improve quality and avoid conflicts of interest,
and on national supervisors to continue to focus on these issues in conducting their
oversight.
see PDF for more...
http://www.g20.org/Documents/g20_declaration_en.pdf
http://www.g20.org/Documents/g20_declaration_en.pdf
THE G-20 TORONTO SUMMIT
DECLARATION
June 26 – 27, 2010
Preamble
1. In Toronto, we held our first Summit of the G-20 in its new capacity as the premier forum
for our international economic cooperation.
2. Building on our achievements in addressing the global economic crisis, we have agreed on
the next steps we should take to ensure a full return to growth with quality jobs, to reform
and strengthen financial systems, and to create strong, sustainable and balanced global
growth.
3. Our efforts to date have borne good results. Unprecedented and globally coordinated fiscal
and monetary stimulus is playing a major role in helping to restore private demand and
lending. We are taking strong steps toward increasing the stability and strength of our
financial systems. Significantly increased resources for international financial institutions
are helping stabilise and address the impact of the crisis on the world’s most vulnerable.
Ongoing governance and management reforms, which must be completed, will also enhance
the effectiveness and relevance of these institutions. We have successfully maintained our
strong commitment to resist protectionism.
4. But serious challenges remain. While growth is returning, the recovery is uneven and
fragile, unemployment in many countries remains at unacceptable levels, and the social
impact of the crisis is still widely felt. Strengthening the recovery is key. To sustain
recovery, we need to follow through on delivering existing stimulus plans, while working to
create the conditions for robust private demand. At the same time, recent events highlight
the importance of sustainable public finances and the need for our countries to put in place
credible, properly phased and growth-friendly plans to deliver fiscal sustainability,
differentiated for and tailored to national circumstances. Those countries with serious fiscal
challenges need to accelerate the pace of consolidation. This should be combined with
efforts to rebalance global demand to help ensure global growth continues on a sustainable
path. Further progress is also required on financial repair and reform to increase the
transparency and strengthen the balance sheets of our financial institutions, and support
credit availability and rapid growth, including in the real economy. We took new steps to
build a better regulated and more resilient financial system that serves the needs of our
citizens. There is also a pressing need to complete the reforms of the international financial
institutions.
5. Recognizing the importance of achieving strong job growth and providing social protection
to our citizens, particularly our most vulnerable, we welcome the recommendations of our
2
Labour and Employment Ministers, who met in April 2010, and the training strategy
prepared by the International Labour Organization (ILO) in collaboration with the
Organisation for Economic Co-operation and Development (OECD).
6. We are determined to be accountable for the commitments we have made, and have
instructed our Ministers and officials to take all necessary steps to implement them fully
within agreed timelines.
The Framework for Strong, Sustainable and Balanced Growth
7. The G-20’s highest priority is to safeguard and strengthen the recovery and lay the
foundation for strong, sustainable and balanced growth, and strengthen our financial systems
against risks. We therefore welcome the actions taken and commitments made by a number
of G-20 countries to boost demand and rebalance growth, strengthen our public finances,
and make our financial systems stronger and more transparent. These measures represent
substantial contributions to our collective well-being and build on previous actions. We will
continue to co-operate and undertake appropriate actions to bolster economic growth and
foster a strong and lasting recovery.
8. The Framework for Strong, Sustainable and Balanced Growth that we launched in
Pittsburgh is the means to achieving our shared objectives, by assessing the collective
consistency of policy actions and strengthening policy frameworks.
9. We have completed the first stage of our Mutual Assessment Process and we concluded that
we can do much better. The IMF and World Bank estimate that if we choose a more
ambitious path of reforms, over the medium term:
· global output would be higher by almost $4 trillion;
· tens of millions more jobs would be created;
· even more people would be lifted out of poverty; and
· global imbalances would be significantly reduced.
Increasing global growth on a sustainable basis is the most important step we can take in
improving the lives of all of our citizens, including those in the poorest countries.
10. We are committed to taking concerted actions to sustain the recovery, create jobs and to
achieve stronger, more sustainable and more balanced growth. These will be differentiated
and tailored to national circumstances. We agreed today on:
· Following through on fiscal stimulus and communicating “growth friendly” fiscal
consolidation plans in advanced countries that will be implemented going forward.
Sound fiscal finances are essential to sustain recovery, provide flexibility to respond
to new shocks, ensure the capacity to meet the challenges of aging populations, and
avoid leaving future generations with a legacy of deficits and debt. The path of
adjustment must be carefully calibrated to sustain the recovery in private demand.
3
There is a risk that synchronized fiscal adjustment across several major economies
could adversely impact the recovery. There is also a risk that the failure to implement
consolidation where necessary would undermine confidence and hamper growth.
Reflecting this balance, advanced economies have committed to fiscal plans that will
at least halve deficits by 2013 and stabilize or reduce government debt-to-GDP ratios
by 2016. Recognizing the circumstances of Japan, we welcome the Japanese
government’s fiscal consolidation plan announced recently with their growth strategy.
Those with serious fiscal challenges need to accelerate the pace of consolidation.
Fiscal consolidation plans will be credible, clearly communicated, differentiated to
national circumstances, and focused on measures to foster economic growth.
· Strengthening social safety nets, enhancing corporate governance reform, financial
market development, infrastructure spending, and greater exchange rate flexibility in
some emerging markets;
· Pursuing structural reforms across the entire G-20 membership to increase and sustain
our growth prospects; and
· Making more progress on rebalancing global demand.
Monetary policy will continue to be appropriate to achieve price stability and thereby
contribute to the recovery.
11. Advanced deficit countries should take actions to boost national savings while maintaining
open markets and enhancing export competitiveness.
12. Surplus economies will undertake reforms to reduce their reliance on external demand and
focus more on domestic sources of growth.
13. We are committed to narrowing the development gap and that we must consider the impact
of our policy actions on low-income countries. We will continue to support development
financing, including through new approaches that encourage development financing from
both public and private sources.
14. We recognize that these measures will need to be implemented at the national level and will
need to be tailored to individual country circumstances. To facilitate this process, we have
agreed that the second stage of our country-led and consultative mutual assessment will be
conducted at the country and European level and that we will each identify additional
measures, as necessary, that we will take toward achieving strong, sustainable, and balanced
growth.
Financial Sector Reform
15. We are building a more resilient financial system that serves the needs of our economies,
reduces moral hazard, limits the build up of systemic risk, and supports strong and stable
economic growth. We have strengthened the global financial system by fortifying
4
prudential oversight, improving risk management, promoting transparency, and reinforcing
international cooperation. A great deal has been accomplished. We welcome the full
implementation of the European Stabilization Mechanism and Facility, the EU decision to
publicly release the results of ongoing tests on European banks, and the recent US financial
reform bill.
-16. But more work is required. Accordingly, we pledge to act together to achieve the
commitments to reform the financial sector made at the Washington, London and Pittsburgh
Summits by the agreed or accelerated timeframes. The transition to new standards will take
into account the cumulative macroeconomic impact of the reforms in advanced and emerging
economies. We are committed to international assessment and peer review to ensure that all
our decisions are fully implemented.
17. Our reform agenda rests on four pillars.
18. The first pillar is a strong regulatory framework. We took stock of the progress of the Basel
Committee on Banking Supervision (BCBS) towards a new global regime for bank capital
and liquidity and we welcome and support its work. Substantial progress has been made on
reforms that will materially raise levels of resilience of our banking systems. The amount of
capital will be significantly higher and the quality of capital will be significantly improved
when the new reforms are fully implemented. This will enable banks to withstand – without
extraordinary government support – stresses of a magnitude associated with the recent
financial crisis. We support reaching agreement at the time of the Seoul Summit on the new
capital framework. We agreed that all members will adopt the new standards and these will
be phased in over a timeframe that is consistent with sustained recovery and limits market
disruption, with the aim of implementation by end-2012, and a transition horizon informed
by the macroeconomic impact assessment of the Financial Stability Board (FSB) and BCBS.
Phase-in arrangements will reflect different national starting points and circumstances, with
initial variance around the new standards narrowing over time as countries converge to the
new global standard.
19. We agreed to strengthen financial market infrastructure by accelerating the implementation
of strong measures to improve transparency and regulatory oversight of hedge funds, credit
rating agencies and over-the-counter derivatives in an internationally consistent and nondiscriminatory
way. We re-emphasized the importance of achieving a single set of high
quality improved global accounting standards and the implementation of the FSB’s
standards for sound compensation.
20. The second pillar is effective supervision. We agreed that new, stronger rules must be
complemented with more effective oversight and supervision. We tasked the FSB, in
consultation with the IMF, to report to our Finance Ministers and Central Bank Governors in
October 2010 on recommendations to strengthen oversight and supervision, specifically
5
relating to the mandate, capacity and resourcing of supervisors and specific powers which
should be adopted to proactively identify and address risks, including early intervention.
21. The third pillar is resolution and addressing systemic institutions. We are committed to
design and implement a system where we have the powers and tools to restructure or resolve
all types of financial institutions in crisis, without taxpayers ultimately bearing the burden,
and adopted principles that will guide implementation. We called upon the FSB to consider
and develop concrete policy recommendations to effectively address problems associated
with, and resolve, systemically important financial institutions by the Seoul Summit. To
reduce moral hazard risks, there is a need to have a policy framework including effective
resolution tools, strengthened prudential and supervisory requirements, and core financial
market infrastructures. We agreed the financial sector should make a fair and substantial
contribution towards paying for any burdens associated with government interventions,
where they occur, to repair the financial system or fund resolution, and reduce risks from the
financial system. We recognized that there are a range of policy approaches to this end.
Some countries are pursuing a financial levy. Other countries are pursuing different
approaches.
22. The fourth pillar is transparent international assessment and peer review. We have
strengthened our commitment to the IMF/World Bank Financial Sector Assessment
Program (FSAP) and pledge to support robust and transparent peer review through the FSB.
We are addressing non-cooperative jurisdictions based on comprehensive, consistent, and
transparent assessment with respect to tax havens, the fight against money laundering and
terrorist financing and the adherence to prudential standards.
International Financial Institutions and Development
23. The International Financial Institutions (IFIs) have been a central part of the global response
to the financial and economic crisis, mobilizing critical financing, including $750 billion by
the IMF and $235 billion by the Multilateral Development Banks (MDBs). This has
underscored the value of these institutions as platforms for our global cooperation.
24. We commit to strengthening the legitimacy, credibility and effectiveness of the IFIs to make
them even stronger partners for us in the future.
25. Towards this end, we have fulfilled our Pittsburgh Summit commitment on the MDBs. This
includes $350 billion in capital increases for the MDBs, allowing them to nearly double
their lending. This new capital is joined to ongoing and important reforms to make these
institutions more transparent, accountable and effective, and to strengthen their focus on
lifting the lives of the poor, underwriting growth, and addressing climate change and food
security.
6
26. We will fulfill our commitment to ensure an ambitious replenishment for the concessional
lending facilities of the MDBs, especially the International Development Association and
the African Development Fund.
27. We have endorsed the important voice reforms agreed by shareholders at the World Bank,
which will increase the voting power of developing and transition countries by 4.59% since
2008.
28. We underscore our resolve to ensure ratification of the 2008 IMF Quota and Voice Reforms
and expansion of the New Arrangements to Borrow (NAB).
29. We called for an acceleration of the substantial work still needed for the IMF to complete
the quota reform by the Seoul Summit and in parallel deliver on other governance reforms,
in line with commitments made in Pittsburgh.
30. Today we build on our earlier commitment to open, transparent and merit-based selection
processes for the heads and senior leadership of all the IFIs. We will strengthen the selection
processes in the lead up to the Seoul Summit in the context of broader reform.
31. We agreed to task our Finance Ministers and Central Bank Governors to prepare policy
options to strengthen global financial safety nets for our consideration at the Seoul Summit.
Our goal is to build a more stable and resilient international monetary system.
32. We stand united with the people of Haiti and are providing much-needed reconstruction
assistance, including the full cancellation of all of Haiti’s IFI debt. We welcome the
launching of the Haiti Reconstruction Fund.
33. We have launched the SME Finance Challenge and commit to mobilizing funding for
implementation of winning proposals, including through the strong support of the MDBs.
We have developed a set of principles for innovative financial inclusion.
34. We welcome the launch of the Global Agriculture and Food Security Program in fulfillment
of our Pittsburgh commitment on food security, an important step to further implement the
Global Partnership for Agriculture and Food Security, and invite further contributions.
Looking ahead, we commit to exploring innovative, results-based mechanisms to harness
the private sector for agricultural innovation. We call for the full implementation of the
L’Aquila Initiative and the application of its principles.
7
Fighting Protectionism and Promoting Trade and Investment
35. While the global economic crisis led to the sharpest decline of trade in more than seventy
years, G-20 countries chose to keep markets open to the opportunities that trade and
investment offer. It was the right choice.
36. As such, we renew for a further three years, until the end of 2013, our commitment to
refrain from raising barriers or imposing new barriers to investment or trade in goods and
services, imposing new export restrictions or implementing World Trade Organization
(WTO)-inconsistent measures to stimulate exports, and commit to rectify such measures as
they arise. We will minimize any negative impact on trade and investment of our domestic
policy actions, including fiscal policy and action to support the financial sector. We ask the
WTO, OECD and UNCTAD to continue to monitor the situation within their respective
mandates, reporting publicly on these commitments on a quarterly basis.
37. Open markets play a pivotal role in supporting growth and job creation, and in achieving our
goals under the G-20 Framework for Strong, Sustainable and Balanced Growth. We ask the
OECD, the ILO, World Bank, and the WTO to report on the benefits of trade liberalization
for employment and growth at the Seoul Summit.
38. We therefore reiterate our support for bringing the WTO Doha Development Round to a
balanced and ambitious conclusion as soon as possible, consistent with its mandate and
based on the progress already made. We direct our representatives, using all negotiating
avenues, to pursue this objective, and to report on progress at our next meeting in Seoul,
where we will discuss the status of the negotiations and the way forward.
39. We commit to maintain momentum for Aid for Trade. We also ask international agencies,
including the World Bank and other Multilateral Development Banks to step up their
capacity and support trade facilitation which will boost world trade.
Other Issues and Forward Agenda
40. We agree that corruption threatens the integrity of markets, undermines fair competition,
distorts resource allocation, destroys public trust and undermines the rule of law. We call
for the ratification and full implementation by all G-20 members of the United Nations
Convention against Corruption (UNCAC) and encourage others to do the same. We will
fully implement the reviews in accordance with the provisions of UNCAC. Building on the
progress made since Pittsburgh to address corruption, we agree to establish a Working
Group to make comprehensive recommendations for consideration by Leaders in Korea on
how the G-20 could continue to make practical and valuable contributions to international
efforts to combat corruption and lead by example, in key areas that include, but are not
limited to, adopting and enforcing strong and effective anti-bribery rules, fighting corruption
8
in the public and private sectors, preventing access of corrupt persons to global financial
systems, cooperation in visa denial, extradition and asset recovery, and protecting
whistleblowers who stand-up against corruption.
41. We reiterate our commitment to a green recovery and to sustainable global growth. Those of
us who have associated with the Copenhagen Accord reaffirm our support for it and its
implementation and call on others to associate with it. We are committed to engage in
negotiations under the UNFCCC on the basis of its objective provisions and principles
including common but differentiated responsibilities and respective capabilities and are
determined to ensure a successful outcome through an inclusive process at the Cancun
Conferences. We thank Mexico for undertaking to host the sixteenth Conference of the
Parties (COP 16) in Cancun from November 29 to December 20, 2010 and express our
appreciation for its efforts to facilitate negotiations. We look forward to the outcome of the
UN Secretary-General’s High-Level Advisory Group on Climate Change Financing which
is, inter alia, exploring innovative financing.
42. We note with appreciation the report on energy subsidies from the International Energy
Agency (IEA), Organization of the Petroleum Exporting Countries (OPEC), OECD and
World Bank. We welcome the work of Finance and Energy Ministers in delivering
implementation strategies and timeframes, based on national circumstances, for the
rationalization and phase out over the medium term of inefficient fossil fuel subsidies that
encourage wasteful consumption, taking into account vulnerable groups and their
development needs. We also encourage continued and full implementation of countryspecific
strategies and will continue to review progress towards this commitment at
upcoming summits.
43. Following the recent oil spill in the Gulf of Mexico we recognize the need to share best
practices to protect the marine environment, prevent accidents related to offshore
exploration and development, as well as transportation, and deal with their consequences.
44. We recognize that 2010 marks an important year for development issues. The September
2010 Millennium Development Goals (MDG) High Level Plenary will be a crucial
opportunity to reaffirm the global development agenda and global partnership, to agree on
actions for all to achieve the MDGs by 2015, and to reaffirm our respective commitments to
assist the poorest countries.
45. In this regard it is important to work with Least Developed Countries (LDCs) to make them
active participants in and beneficiaries of the global economic system. Accordingly we
thank Turkey for its decision to host the 4th United Nations Conference on the LDCs in June
2011.
46. We welcome the Global Pulse Initiative interim report and look forward to an update.
9
47. Narrowing the development gap and reducing poverty are integral to our broader objective
of achieving strong, sustainable and balanced growth and ensuring a more robust and
resilient global economy for all. In this regard, we agree to establish a Working Group on
Development and mandate it to elaborate, consistent with the G-20’s focus on measures to
promote economic growth and resilience, a development agenda and multi-year action plans
to be adopted at the Seoul Summit.
48. We will meet next in Seoul, Korea, on November 11-12, 2010. We will convene in
November 2011 under the Chairmanship of France and in 2012 under the Chairmanship of
Mexico.
49. We thank Canada for hosting the successful Toronto Summit.
10
ANNEX I
The Framework for Strong, Sustainable and Balanced Growth
1. As a result of the extraordinary and highly coordinated policy actions agreed to at the
Washington, London and Pittsburgh G-20 Summits, the global economy is recovering faster
than was expected. Our decisive and unprecedented actions over the past two years have
limited the downturn and spurred recovery.
2. Yet risks remain. Unemployment remains unacceptably high in many G-20 economies. The
recovery is uneven across G-20 members both across advanced economies and between
advanced and emerging economies. This poses risks to the continued economic expansion.
There is a risk that global current account imbalances will widen again, absent further policy
action. While considerable progress has been made in moving ahead on our financial sector
repair and reform agenda, financial markets remain fragile and credit flows restrained.
Concerns over large fiscal deficits and rising debt levels in some countries have also become
a source of uncertainty and financial market volatility.
3. The G-20’s highest priority is to safeguard and strengthen the recovery and lay the
foundation for strong, sustainable and balanced growth, including strengthening our
financial systems against risks. We therefore welcome the actions taken and commitments
made by a number of G-20 countries. Among more recent measures, we particularly
welcome the full implementation of the European Financial Stability Mechanism and
Facility; the EU decision to publicly release the results of ongoing tests on European banks;
and the recent announcements of fiscal consolidation plans and targets by a number of G-20
countries. These represent substantial contributions to our collective well-being and build on
our previous actions. We will continue to cooperate and undertake appropriate actions to
bolster economic growth and foster a strong and lasting recovery.
4. The Framework for Strong, Sustainable and Balanced Growth we launched in Pittsburgh is
the means to achieving our shared objectives. G-20 members have a responsibility to the
community of nations to assure the overall health of the global economy. We committed to
assess the collective consistency of our policy actions and to strengthen our policy
frameworks in order to meet our common objectives. Through our collective policy action,
we will ensure growth is sustained, more balanced, shared across all countries and regions
of the world, and consistent with our development goals.
5. We have completed the first stage of our Mutual Assessment Process. As we requested in
Pittsburgh, G-20 Finance Ministers and Central Bank Governors, with the support of the
IMF, World Bank, OECD, ILO and other international organisations, have assessed the
collective consistency of our individual policy frameworks and global prospects under
alternative policy scenarios.
11
6. The assessment is that in the absence of a coordinated policy response: global output is
likely to remain below its pre-crisis trend; unemployment remains above pre-crisis levels in
most countries; fiscal deficits and debt in some advanced economies reach unacceptably
high levels; and, global current account imbalances, which narrowed during the crisis, widen
again. Moreover, this outlook is subject to considerable downside risks.
7. We concluded that we can do much better. The IMF and World Bank estimate that if we
choose a more ambitious path of reforms, over the medium term, we could:
· raise global output by up to $4 trillion;
· create an estimated 52 million jobs;
· lift up to 90 million people out of poverty; and
· significantly reduce global current account balances.
If we act in a coordinated manner, all regions are better off, now and in the future.
Moreover, increasing global growth on a sustainable basis is the most important step we can
take in improving the lives of all, including those in the poorest countries.
8. We are committed to taking concerted actions to sustain the recovery, create jobs and to
achieve stronger, more sustainable and more balanced growth. These will be differentiated
and tailored to national circumstances. We agreed today on:
· Following through on fiscal stimulus and communicating “growth-friendly” fiscal
consolidation plans in advanced countries and that will be implemented going
forward;
· strengthening social safety nets, enhancing corporate governance reform, financial
market development, infrastructure spending, and increasing exchange rate flexibility
in some emerging markets;
· pursuing structural reforms across the entire G-20 membership to increase and sustain
our growth prospects; and
· Making further progress on rebalancing global demand.
Monetary policy will continue to be appropriate to achieve price stability and thereby
contribute to the recovery.
9. We agreed to follow through on fiscal stimulus and communicating “growth friendly” fiscal
consolidation plans in advanced countries that will be implemented going forward. Sound
fiscal finances are essential to sustain recovery, provide flexibility to respond to new shocks,
ensure the capacity to meet the challenges of aging populations, and avoid leaving future
generations with a legacy of deficits and debt. The path of adjustment must be carefully
calibrated to sustain the recovery in private demand. There is a risk that synchronized fiscal
adjustment across several major economies could adversely impact the recovery. There is
also a risk that the failure to implement consolidation where necessary would undermine
confidence and hamper growth. Reflecting this balance, advanced economies have
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committed to fiscal plans that will at least halve deficits by 2013 and stabilize or reduce
government debt-to-GDP ratios by 2016. Recognizing the circumstances of Japan, we
welcome the Japanese government’s fiscal consolidation plan announced recently with their
growth strategy. Those with serious fiscal challenges need to accelerate the pace of
consolidation. Fiscal consolidation plans will be credible, clearly communicated,
differentiated to national circumstances, and focused on measures to foster economic
growth.
10. We have agreed on a set of principles to guide these fiscal consolidation plans by advanced
economies:
· Fiscal consolidation plans will be credible. They will be based on prudent
assumptions with respect to economic growth and our respective fiscal positions, and
they will identify specific measures to achieve a target path that ensures fiscal
sustainability. Strengthened budgetary frameworks and institutions can help underpin
the credibility of consolidation strategies.
· The time to communicate our medium-term fiscal plans is now. We will elaborate
clear and credible plans that put our fiscal finances on a sustainable footing. The
speed and timing of withdrawing fiscal stimulus and reducing deficits and debt will
be differentiated for and tailored to national circumstances, and the needs of the
global economy. However, it is clear that consolidation will need to begin in
advanced economies in 2011, and earlier for countries experiencing significant fiscal
challenges at present.
· Fiscal consolidation will focus on measures that will foster economic growth. We
will look at ways to use our fiscal resources more efficiently, to help reduce the
overall cost of our interventions while targeting resources to where they are most
needed. In addition, we will focus on structural reforms that will promote long-term
growth.
11. Advanced deficit countries should take actions to boost national savings while maintaining
open markets and enhancing export competitiveness.
12. Surplus economies will undertake reforms to reduce their reliance on the external demand
and focus more on domestic sources of growth. This will help strengthen their resilience to
external shocks and promote more stable growth. To do this, advanced surplus economies
will focus on structural reforms that support increased domestic demand. Emerging surplus
economies will undertake reforms tailored to country circumstances to:
· Strengthen social safety nets (such as public health care and pension plans),
corporate governance and financial market development to help reduce precautionary
savings and stimulate private spending;
· Increase infrastructure spending to help boost productive capacity and reduce supply
bottlenecks; and
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· Enhance exchange rate flexibility to reflect underlying economic fundamentals.
Excess volatility and disorderly movements in exchange rates can have adverse
implications for economic and financial stability. Market-oriented exchange rates that
reflect underlying economic fundamentals contribute to global economic stability.
13. Across all G-20 members, we recognise that structural reforms can have a substantial impact
on economic growth and global welfare. We will implement measures that will enhance the
growth potential of our economies in a manner that pays particular attention to the most
vulnerable. Reforms could support the broadly-shared expansion of demand if wages grow
in line with productivity. It will be important to strike the right balance between policies that
support greater market competition and economic growth and policies that preserve social
safety nets consistent with national circumstances. Together these measures will also help
unlock demand. These include:
· Product, service and labour market reforms in advanced economies, particularly those
economies that may have lost some productive capacity during the crisis. Labour
market reforms might include: better targeted unemployment benefits and more
effective active labour market policies (such as job retraining, job search and skills
development programs, and raising labour mobility). It might also include putting in
place the right conditions for wage bargaining systems to support employment.
Product and service market reforms might include strengthening competition in the
service sector; reducing barriers to competition in network industries, professional
services and retail sectors, encouraging innovation and further reducing the barriers to
foreign competition.
· Reducing restrictions on labour mobility, enhancing foreign investment opportunities
and simplifying product market regulation in emerging market economies.
· Avoiding new protectionist measures.
· Completing the Doha Round to accelerate global growth through trade flows. Open
trade will yield significant benefits for all and can facilitate global rebalancing.
· Actions to accelerate financial repair and reform. Weaknesses in financial sector
regulation and supervision in advanced economies led to the recent crisis. We will
implement the G-20 financial reform agenda and ensure a stronger financial system
serves the needs of the real economy. While not at the centre of the crisis, financial
sectors in some emerging economies need to be developed further so that they can
provide the depth and breadth of services required to promote and sustain high rates
of economic growth and development. It is important that financial reforms in
advanced economies take into account any adverse effects on financial flows to
emerging and developing economies. Vigilance is also needed to ensure open capital
markets and avoid financial protectionism.
14. We welcome the recommendations of our Labour and Employment Ministers, who met in
April 2010, on the employment impacts of the global economic crisis. We reaffirm our
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commitment to achieving strong job growth and providing social protection to our most
vulnerable citizens. An effective employment policy should place quality jobs at the heart
of the recovery. We appreciate the work done by the International Labour Organization in
collaboration with the OECD on a training strategy that will help equip the workforce with
the skills required for the jobs of today and those of tomorrow.
15. We are committed to narrowing the development gap and that we must consider the impact
of our policy actions on low-income countries. We will continue support development
financing, including through new approaches that encourage development financing from
both public and private sources. The crisis will have long lasting impact on the development
trajectories of poor countries in every region of the world. Among these effects, developing
countries are likely to face increased challenges in securing financing from both public and
private sources. Many of us have already taken steps to help address this shortfall by
implementing innovative approaches to financing, such as advance market commitments,
the SME challenge and recent progress with respect to financial inclusion. Low-income
countries have the potential to contribute to stronger and more balanced global growth, and
should be viewed as markets for investment.
16. These measures need to be implemented at the national level and tailored to individual
country circumstances. We welcome additional measures announced by some G-20
members aimed at meeting our shared objectives.
17. To facilitate this process, the second stage of our country-led, consultative mutual
assessment will be conducted at the country and European level. Each G-20 member will
identify the measures it is taking to implement the policies we have agreed upon today to
ensure stronger, more sustainable and balanced growth. We ask our Finance Ministers and
Central Bank Governors to elaborate on these measures and report on them when we next
meet. We will continue to draw on the expertise of the IMF, World Bank, OECD, ILO and
other international organisations, as necessary. These measures will form the basis of our
comprehensive action plan that will be announced in the Seoul Summit. As we pursue
strong, sustainable and more balanced growth, we continue to encourage work on
measurement methods to take into account social and environmental dimensions of
economic development.
18. The policy commitments we are making today, along with the significant policy measures
we have already taken, will allow us to reach our objective of strong, sustainable and
balanced growth, the benefits of which will be felt both within the G-20 and across the
globe.
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ANNEX II
Financial Sector Reform
1. The financial crisis has imposed huge costs. This must not be allowed to happen again. The
recent financial volatility has strengthened our resolve to work together to complete
financial repair and reform. We need to build a more resilient financial system that serves
the needs of our economies, reduces moral hazard, limits the build-up of systemic risk and
supports strong and stable economic growth.
2. Collectively we have made considerable progress toward strengthening the global financial
system by fortifying prudential oversight, improving risk management, promoting
transparency and continuously reinforcing international cooperation. We welcome the
strong financial regulatory reform bill in the United States.
3. But there is more to be done. Further repair to the financial sector is critical to achieving
sustainable global economic recovery. More work is required to restore the soundness and
enhance the transparency of banks’ balance sheets and markets; and improve the corporate
governance and risk management of financial firms in order to strengthen the global
financial system and restore the credit needed to fuel sustainable economic growth. We
welcome the decision of EU leaders to publish the results of ongoing tests on European
banks to reassure markets of the resilience and transparency of the European banking
system.
4. We pledge to act together to achieve the commitments to reform the financial sector made at
the Washington, London and Pittsburgh Summits by the agreed or accelerated timeframes.
Transition horizons will take into account the cumulative macroeconomic impact of the
reforms in advanced and emerging economies
Capital and Liquidity
5. We agreed that the core of the financial sector reform agenda rests on improving the
strength of capital and liquidity and discouraging excessive leverage. We agreed to increase
the quality, quantity, and international consistency of capital, to strengthen liquidity
standards, to discourage excessive leverage and risk taking, and reduce procyclicality.
6. We took stock of the progress of the Basel Committee on Banking Supervision (BCBS)
towards a new global regime for bank capital and liquidity and we welcome and support its
work. Substantial progress has been made on reforms that will materially raise levels of
resilience of our banking systems.
· The amount of capital will be significantly higher when the new reforms are fully
implemented.
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· The quality of capital will be significantly improved to reinforce banks’ ability to
absorb losses.
7. We support reaching agreement, at the time of the Seoul Summit, on a new capital
framework that would raise capital requirements by:
· establishing a new requirement that each bank hold in Tier 1 capital, at a minimum,
an increasing share of common equity, after deductions, measured as a percentage of
risk-weighted assets, that enables them to withstand with going concern fully-lossabsorbing
capital – without extraordinary government support – stresses of a
magnitude associated with the recent financial crisis.
· moving to a globally consistent and transparent set of conservative deductions
generally applied at the level of common equity, or its equivalent in the case of nonjoint
stock companies, over a suitable globally-consistent transition period.
8. Based on our agreement at the Pittsburgh Summit that Basel II will be adopted in all major
centers by 2011, we agreed that all members will adopt the new standards and these will be
phased in over a timeframe that is consistent with sustained recovery and limits market
disruption, with the aim of implementation by end-2012, and a transition horizon informed
by the macroeconomic impact assessment of the Financial Stability Board (FSB) and BCBS.
9. Phase-in arrangements will reflect different national starting points and circumstances, with
initial variance around the new standards narrowing over time as countries converge to the
new global standard. Existing public sector capital injections will be grandfathered for the
extent of the transition.
10. We reiterated support for the introduction of a leverage ratio as a supplementary measure to
the Basel II risk-based framework with a view to migrating to Pillar I treatment after an
appropriate transition period based on appropriate review and calibration. To ensure
comparability, the details of the leverage ratio will be harmonized internationally, fully
adjusting for differences in accounting.
11. We acknowledged the importance of the quantitative impact study currently being
conducted by the BCBS that measures the potential impact of the new Basel standards and
will ensure that the new capital and liquidity standards are of high quality and adequately
calibrated. The BCBS- FSB macroeconomic impact study will inform the development of
the phase-in period of the new standards.
12. We welcomed the BCBS agreement on a coordinated start date not later than 31 December
2011 for all elements of the revised trading book rules.
13. We support the BCBS’ work to consider the role of contingent capital in strengthening
market discipline and helping to bring about a financial system where the private sector
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fully bears the losses on their investments. Consideration of contingent capital should be
included as part of the 2010 reform package.
14. We called upon the FSB and the BCBS to report on progress of the full package of reform
measures by the Seoul Summit. We recognize the critical role of the financial sector in
driving a robust economy. We are committed to design a financial system which is resilient,
stable and ensures the continued availability of credit.
More Intensive Supervision
15. We agreed that new, stronger rules must be complemented with more effective oversight
and supervision. We are committed to the Basel Committee’s Core Principles for Effective
Banking Supervision and tasked the FSB, in consultation with the International Monetary
Fund (IMF), to report to our Finance Ministers and Central Bank Governors in October
2010 on recommendations to strengthen oversight and supervision, specifically relating to
the mandate, capacity and resourcing of supervisors and specific powers which should be
adopted to proactively identify and address risks, including early intervention.
Resolution of Financial Institutions
16. We are following through on our commitment to reduce moral hazard in the financial
system. We are committed to design and implement a system where we have the powers
and tools to restructure or resolve all types of financial institutions in crisis, without
taxpayers ultimately bearing the burden. These powers should facilitate “going concern”
capital and liquidity restructuring as well as “gone concern” restructuring and wind-down
measures. We endorsed and have committed to implement our domestic resolution powers
and tools in a manner that preserves financial stability and are committed to implement the
ten key recommendations on cross-border bank resolution issued by the BCBS in March
2010. In this regard, we support changes to national resolution and insolvency processes and
laws where needed to provide the relevant national authorities with the capacity to cooperate
and coordinate resolution actions across borders.
17. We agree that resolution regimes should provide for:
· Proper allocation of losses to reduce moral hazard and protect taxpayers;
· Continuity of critical financial services, including uninterrupted service for insured
depositors;
· Credibility of the resolution regime in the market;
· Minimization of contagion;
· Advanced planning for orderly resolution and transfer of contractual relationships;
and,
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· Effective cooperation and information exchange domestically and among
jurisdictions in the event of a failure of a cross-border institution.
Addressing Systemically Important Financial Institutions
18. We welcomed the FSB’s interim report on reducing the moral hazard risks posed by
systemically important financial institutions. We recognized that more must be done to
address these risks. Prudential requirements for such firms should be commensurate with the
cost of their failure. We called upon the FSB to consider and develop concrete policy
recommendations to effectively address problems associated with and resolve systemically
important financial institutions by the Seoul Summit. This should include more intensive
supervision along with consideration of financial instruments and mechanisms to encourage
market discipline, including contingent capital, bail-in options, surcharges, levies, structural
constraints, and methods to haircut unsecured creditors.
19. We welcomed the substantial progress that has been made regarding the development of
supervisory colleges and crisis management groups for the major complex financial
institutions identified by the FSB.
20. We continue to work together to develop robust agreed-upon institution-specific recovery
and rapid resolution plans for major cross-border institutions by the end of 2010. We further
committed to continue working on ensuring cooperation among jurisdictions in financial
institution resolution proceedings.
Financial Sector Responsibility
21. We agreed the financial sector should make a fair and substantial contribution towards
paying for any burdens associated with government interventions, where they occur, to
repair the financial system or fund resolution.
22. To that end, we recognized that there is a range of policy approaches. Some countries are
pursuing a financial levy. Other countries are pursuing different approaches. We agreed the
range of approaches would follow these principles:
· Protect taxpayers;
· Reduce risks from the financial system;
· Protect the flow of credit in good times and bad times;
· Take into account individual countries’ circumstances and options; and,
· Help promote a level playing field.
23. We thanked the IMF for its work in this area.
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Financial Market Infrastructure and Scope of Regulation
24. We agreed on the need to strengthen financial market infrastructure in order to reduce
systemic risk, improve market efficiency, transparency and integrity. Global action is
important to minimize regulatory arbitrage, promote a level playing field, and foster the
widespread application of the principles of propriety, integrity, and transparency.
25. We pledged to work in a coordinated manner to accelerate the implementation of over-thecounter
(OTC) derivatives regulation and supervision and to increase transparency and
standardization. We reaffirm our commitment to trade all standardized OTC derivatives
contracts on exchanges or electronic trading platforms, where appropriate, and clear through
central counterparties (CCPs) by end-2012 at the latest. OTC derivative contracts should be
reported to trade repositories (TRs). We will work towards the establishment of CCPs and
TRs in line with global standards and ensure that national regulators and supervisors have
access to all relevant information. In addition we agreed to pursue policy measures with
respect to haircut-setting and margining practices for securities financing and OTC
derivatives transactions that will reduce procyclicality and enhance financial market
resilience. We recognized that much work has been done in this area. We will continue to
support further progress in implementing these measures.
26. We committed to accelerate the implementation of strong measures to improve transparency
and regulatory oversight of hedge funds, credit rating agencies and over-the-counter
derivatives in an internationally consistent and non-discriminatory way. We also committed
to improve the functioning and transparency of commodities markets. We call on credit
rating agencies to increase transparency and improve quality and avoid conflicts of interest,
and on national supervisors to continue to focus on these issues in conducting their
oversight.
see PDF for more...
http://www.g20.org/Documents/g20_declaration_en.pdf
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