The conference on «International Cooperation in Times of Global Crisis: Views from G20 countries» organized by the New Economic School (NES), the Centre d’Etudes Prospectives et d’Informations Internationales (CEPII), Bruegel and the National Research University Higher School of Economics (HSE) took place in the HSE on October 18-19, 2012. Financial support was provided by a number of sponsors, including Russian International Affairs Council. The conference became a platform for an exchange of views on the perspectives and challenges for the global economy and ways the G20 can address them within the coming Russian presidency in this institution and beyond, in the long-term framework.
The conference on «International Cooperation in Times of Global Crisis: Views from G20 countries» organized by the New Economic School (NES), the Centre d’Etudes Prospectives et d’Informations Internationales (CEPII), Bruegel and the National Research University Higher School of Economics (HSE) took place in the HSE on October 18-19, 2012.
Financial support was provided by a number of sponsors, including Russian International Affairs Council.
The conference became a platform for an exchange of views on the perspectives and challenges for the global economy and ways the G20 can address them within the coming Russian presidency in this institution and beyond, in the long-term framework.
The speakers discussed a variety of issues, including measures to address the global crisis and financial distress in the Eurozone, reforms of the global financial architecture, cooperation in energy sector, and international trade.
Debating the issue of global economic and financial stability, the participants of the conference emphasized that some countries may face the risk of «a lost decade» in the coming years. However, the crisis can be considered not only as a threat to economic welfare, but also as an opportunity to improve future growth, in particular for the emerging economies. They can avoid this risk of «a lost decade» if proper fiscal restructuring and reforms in their financial sectors are undertaken. Priorities in structural reforms and ways of fiscal adjustment differ across the G20 members. For instance, in Russia implementing the budget rules starting from 2013 is a way to maintain macroeconomic stability and provide rebalancing.
Conference participants discussed the role of special financial stabilization mechanisms and options for establishing institutions called the lenders of last resort (LoLRs). The issues raised included:
1. Can the IMF be a LLoR?
2. Are there enough resources in the world for a LoLR to act effectively?
3. Can regional banks act as LoLPs?
One view was that LoLRs could formalize the existing bilateral swap lines between countries and thus help those facing liquidity problems. All participants agreed that there was no blueprint for the LoLRs way forward. They also stressed that if the G20 could agree such a mechanism, it would be a major achievement.
Future patterns of international financing also were among the key topics discussed at the conference. Speakers came to the conclusion that the G20 should promote long-term financing instruments in local currencies, as these can effectively support investment in infrastructure, thus strengthening growth and employment, and reduce financial risks. The issue of regulation in the financial markets should remain a priority, as overused financing creates the risk of overlending. Taking this into account, deleveraging must become an immediate priority, in particular for the Eurozone.
The conference participants have touched upon a number of challenges concerning energy sector. Possible G20 action in this area could include building an open playing field through finding common objectives for all its members, as well as providing regular exchange of information and peer reviews. Technological developments which improve energy efficiency, and changes in the global primary energy source balance would contribute to reducing greenhouse gas emissions and meeting energy supply needs of Europe, the US and China. However, more action from the G20 is needed in both areas. Besides, international community should ensure adequate energy policies in resource-rich countries by supporting economic diversification and improving governance.
The speakers agreed that the G20 mostly proved its effectiveness in addressing global challenges. It managed to establish new international institutions and processes (such as the FSB and MAP) and improve collaboration between the existing ones. Representatives of different G20 member states believe its role in global governance should be further strengthened. However, the expectations of the G20 have been put very high due to its «appointment» by the G20 members as the key forum for coordinating their economic policies.
In the future the G20 may risk facing diminishing returns. The reason is the G20 focus on short-term issues
Many of the speakers at the conference highlighted the need for G20 to respond to longer-term challenges, develop a dialogue between its members and meet their demand for global governance to tackle unaddressed issues in areas other than financial regulation.
Source: International Organisations Research Institute, National research university ‘Higher school of economics’
