Thu, November 13, 2008
Business > 2008 G20 Summit

BACKGROUND: What is the G20 group of nations?

2008-11-13 11:23:09 GMT2008-11-13 19:23:09 (Beijing Time)

The world leaders meeting this weekend in Washington at an emergency finance summit amidst the worst crisis since the Great Depression have a loose affiliation with each other under the Group of 20, the so-called G20. The group grew out of the financial crises of the 1990s - like Mexico's - and was founded in 1999 with the aim of including emerging market countries which had been excluded from the "core of global economic discussion and governance," the G20 wrote on its website.

The idea was to institutionalize dialogue and reduce the world economy's "susceptibility to crises."

Members include the finance ministers and central bank heads in 19 countries plus the European Union, represented by the rotating EU presidency - currently French President Nicolas Sarkozy - and the European Central Bank.

Member countries are: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, Britain, the US and the EU.

Unofficial members include the International Monetary Fund (IMF) and the World Bank.

The summit was announced several weeks ago by US President George Bush, who was under pressure from the EU to tackle the finance emergency since the crisis began in the US with a lax system of selling and securitizing mortgages.

More than 3 million foreclosures have followed since late 2006.

Spain in particular has been upset about not being included in the summit, but so far, no invitation has been issued by the White House.

Last weekend in Sao Paulo, Brazil, the G20 laid the basis for the upcoming summit.

In its final statement, the group noted that the financial crisis that is threatening world recession resulted from "excessive risk- taking and faulty risk management practices in financial markets."

The group agreed that all nations must tackle the problem of excessive leverage in money-lending, tighten their supervision of financial systems and ensure proper oversight of financial firms such as credit-rating agencies.

US credit-rating agencies have come under fire for giving good ratings to the unregulated securitized mortgages which were then sold worldwide.

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