G20- The Council That Wasn’t
Manisha Georgina reports from The Group of 20 Nations.
The Group of 20 Nations discussed the role of Central Banks as guardians of the global economy. Japan emphasized their economic system and how inflation could be used as a tool to control the economic set up of a country. Japan also showed some interest in future ties with Russia in relation to the Global oil crisis. Next, China elaborated on how their nation had control over a good amount of resources and how it has changed its economic policies from industrial to a more service based economy. The attention was then shifted to the Euro zone crisis and how the policies of the central bank could change the economic situation of the country as a whole. India, then tried to establish its status to the council that it had its own ‘Make in India’ policy to strengthen its economy. Russia made it very clear that it only believed in “learning through mistakes”.
There was a large shift in the interest when the discussion on the history of financial crises and their causes, started out by Russia which said that the Central Bank of Russia (CBR) cut main interest rates and is facilitating growth based on that and declared that it didn’t want to risk a crippling economy like that of The United States Of America. France emphasized on the Eurozone crisis and the Greek depression. The United Kingdom, however made it very clear that it wanted to bail out of the European Central Bank and suggested that that they stop their inter banking loans. Japan said that the IMF can’t be trusted and enunciated the 1997 crisis. Saudi Arabia had its share of words on the Organization of Petroleum Exporting Countries (OPEC)’s foreign policy and how that would affect the economic conditions and suggested that standards like BIS should be adopted by many more countries. France and Italy reiterated their support to Greece during its crisis as it would be mandatory for the European Central Bank to function properly and that this will to some extent stabilise the market in the future. Japan once again mentioned that the oil reserves of The Russian Federation could help other countries only if Russia coordinated with them.
“We only learn from our own mistakes”-Russia
It was suggested by China that only when the bank becomes independent, the economic future will be bright or otherwise it would only be a blame game. Saudi Arabia pointed out that if governments themselves show instability then there will be huge amount of risk involved while buying the bonds. It was also stated that economic reform cannot be achieved without political reforms. It did support bailouts and said that in the economic world it was always the survival of the fittest. It was suggested by Japan that all the treaties made should be short term and not long term. It also stated that loans are better when given to the worker instead of big banks where it is stored without much use.
The possible sources for financial instability were discussed, where India emphasized that the majority of these turbulences happen due to non-proper structure of the economic system. This developed on to a lot of situations including the geopolitical set ups of countries. Other factors that were brought up included shadow banking and how energy crisis would also affect a lot of situations since the OPEC had monopolistic hand in oil trade.
