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G20 aims at bank pay and capital; stimulus to stay(Agencies)
Updated: 2009-09-06 09:11
LONDON: G20 finance leaders on Saturday took aim at excessive bank pay and risk-taking at the root of the financial crisis and insisted trillions of dollars of emergency economic supports would be needed for some time. Although the global economy looks brighter than when the Group of 20 finance ministers and central bankers met in April, their closing statement said they would not remove economic stimulus until the recovery was well entrenched.
But as the focus shifted from crisis-fighting to establishing a safer financial system for the future, ministers searched for consensus on precise plans to rein in bankers' huge bonuses and use more of their profits to build buffers against any future crisis. "We cannot put the world in a position where things go back to where they were at the peak of the boom," US Treasury Secretary Timothy Geithner said. "It cannot happen, will not happen and you can't expect the markets to solve that problem on their own because it's a huge collective action problem...so it has to come through things that countries legislate." EXIT, BUT NOT NOW On the public stage, the message was one of solidarity as policymakers agreed they must keep spending the $5 trillion already earmarked as economic stimulus and delay any unwinding of emergency fiscal and monetary measures until economies are sturdy enough to stand on their own. "The classic errors of economic policy during crises are that governments tend to act too late with insufficient force and then put the brakes on too early," Geithner said. "We are not going to repeat those mistakes." In a final statement, the G20 officials from rich and developing countries also said they would work with the International Monetary Fund and Financial Stability Board to develop cooperative and coordinated exit strategies. Behind the scenes, some G20 sources expressed frustration that there was not more progress made in curbing excessive pay packages for bankers -- particularly those employed by firms that have received billions of dollars in government support. "There is broad agreement on what to do. The problem is we need to go beyond agreement. We need to have concrete measures," said International Monetary Fund chief Dominique Strauss-Kahn. "I'm impressed by the level of consensus but I'm still waiting for strong measures to be decided and also to be implemented at the national level." |
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