Journal Issue

Group of 20: Officials agree sound policy is key to reducing international financial crises

International Monetary Fund. External Relations Dept.
Published Date:
January 2000
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Ministers and governors welcomed the improvement in global economic conditions. They reaffirmed the importance of continued progress by the World Trade Organization toward multilateral liberalization of trade in goods and services that would bring broad-based benefits to the global economy.

Ministers and governors discussed the role and objectives of the Group of 20 and ways to address the main vulnerabilities currently facing their respective economies and the global financial system. They recognized that sound national economic and financial policies are central to building an international financial system that is less prone to crises. They noted the importance of strengthening national balance sheets to help cushion against unexpected shocks. They encouraged steps to strengthen sovereign debt management and greater attention to the impact of various government policies on the borrowing decisions of private firms.

They recognized that unsustainable exchange rate regimes are a critical source of vulnerability and that a consistent exchange rate and monetary policy are essential. They discussed a range of possible domestic policy responses to the challenges of globalization and exchanged views on the role of the international community in helping to reduce vulnerability to crises.

They welcomed the important work that has been done by the Bretton Woods institutions and other bodies toward the establishment of international codes and standards in key areas, including transparency, data dissemination, and financial sector policy. They agreed that the more widespread implementation of such codes and standards would contribute to more prosperous domestic economies and a more stable international financial system. To demonstrate leadership in this area, ministers and governors agreed to undertake the completion of reports on observance of standards and codes (“transparency reports”) and financial sector assessments, within the context of continuing efforts by the IMF and the World Bank to improve these mechanisms. This commitment will help mobilize support for measures to strengthen domestic capacity, policies, and institutions.

Members of the Group of 20 asked their deputies to consider existing work in other forums (including the Financial Stability Forum) and to examine further ways to reduce vulnerabilities to crises. Deputies will report on their progress at the time of the next meeting of Group of 20 finance ministers and governors, to be held in Canada in autumn 2000.

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