G-20 FM Meet talks on prudential regulation

G-20 FM Meet talks on prudential regulation
2010-06-05 14:59:43 - Republic of Korea is honored to chair the Group of Twenty in 2010.G-20 Finance Ministers' and Central Bank Governors' Meeting, June 3-5 in Busan in South Korea, the ministers and central bankers from the world's leading economies said excessive budget deficits should be tackled immediately.

With debt crisis hitting the recovery process in some parts of Europe, the G-20 finance ministers resolved to put government finances in better shape. The joint communique, issued at the end of the two-day meet at Busan in South Korea today warned that high debts could derail the growth process. It called for contribution from financial sector players to the
measures taken by governments to prop up sagging economies. The grouping of 20 developed and developing countries highlighted the need to rein in high fiscal deficits of governments as they are making financial markets volatile.

This FM's meeting sets the agenda for a summit of G20 leaders in Toronto on 26-27 June. A global bank tax argued by the US and Europe, but opposed by India and other developing nations, as well as Canada and Australia. Agreed on transparency, regulation and supervision for hedge funds, credit rating agencies, compensation practices and over-the-counter derivatives.

It is cautioned that the measures to control fiscal deficits and prop up growth should be customized. It further said the countries with high fiscal deficit should speed up the process of reining the gap between government expenditure and receipts. Indian finance minister Pranab Mukherjee said at the meeting that the countries with high fiscal deficits should start announcing exit from stimulus measures now, while others can stagger it for a while. As the financial meltdown was the key cause of global economic crisis, the communique called for further strengthening of banks' balance sheets and better corporate governance of financial firms. However, with India, Australia and Canada opposed to the idea of global bank tax, the issue was not directly referred to in the communique. The communique also supported New Delhi's stand on prudential regulation on financial markets on improving transparency regulation and supervision of hedge funds, credit rating agencies.

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