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Download PDF: Working Paper 13

This paper looks at how the G20 delivered on its promises: financial firewalls expanded in size but the commitment to strengthen and reform International Financial Institutions was put on hold.

AuthorGong Cheng | Economist and policy strategist at the European Stability Mechanism

Abstract:

Since the Global Financial Crisis, the Group of Twenty (G20) has not only become the premier forum for policy coordination among major economies but has also played an important role in promoting reforms to safeguard global financial stability. This paper focuses on the commitments the G20 has made to strengthen the Global Financial Safety Net since its first Leaders’ Summit in Washington, D.C. in 2008. This paper first compares reform proposals that the G20 achieved and those it did not during the subsequent six years, or by the 2014 Summit in Australia. The paper finds that reforms aimed at enhancing financial resources and renewing instruments for emergency liquidity provision were substantially implemented. However, institutional reforms concerning the governing structure of International Financial Institutions were delayed. The paper then analyses, from a political economy perspective, why the G20 delivered on the first set of reforms, but not on the second. The urgency of responding to the crisis, the role of particular countries as well as institutional features of the G20 framework determine the political interests in this reform area.

JEL codes: F33, F53, F55

Disclaimer: This Working Paper should not be reported as representing the views of the ESM. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the ESM or ESM policy. No responsibility or liability is accepted by the ESM in relation to the accuracy or completeness of the information, including any data sets, presented in this Working Paper.

Source: European Stability Mechanism | Working Paper Series | Volume 2016 | No 14 | May 2016 | 34 Pages
 

Copyright © European Stability Mechanism, 2016 | All rights reserved. Any reproduction, publication and reprint in the form of a different publication, whether printed or produced electronically, in whole or in part, is permitted only with the explicit written authorisation of the European Stability Mechanism.