G20 finance ministers and central bank governors meet on the margins of the IMF Spring Meeting
On the margins of the IMF Spring Meeting in Washington, the G20 finance ministers and central bank governors continued their discussions on core issues of the German G20 presidency. Speaking afterwards at a joint press conference with Federal Finance Minister Wolfgang Schäuble, Bundesbank President Jens Weidmann gave an account of the main areas in which progress was made.
Mr Weidmann highlighted the upbeat economic developments in the advanced countries and major emerging market economies. He mentioned, for example, that the International Monetary Fund had recently revised its forecast for global economic growth in 2017 up slightly to 3.5%, though he also issued a reminder that the positive economic outlook is subject to change. He explained that this is due to a number of downside risks, including geopolitical tensions, rising fears of trade conflicts and other political developments such as questions over the future relationship between the United Kingdom and the European Union.
Commitment to structural reforms
"Against this background, the finance ministers and central bank governors agreed to strengthen efforts to achieve strong, sustainable, balanced and inclusive growth," Mr Weidmann said, adding that, in that vein, they reinforced their commitment to further structural reforms. The Bundesbank president went on to say that, according to an OECD report, the pace of reform has slowed over the last few years, which ultimately dampens growth prospects.
Besides the lack of structural reforms, Mr Weidmann cited the rising inequality seen in many countries as another factor that puts a strain on potential growth. This, he remarked, explains the emphasis on inclusive growth. A further danger in Mr Weidmann's view is that when inequality rises, people may become increasingly disenchanted with open markets. The Bundesbank president added that he is quite certain that inclusive growth will remain at the top of the G20 agenda even beyond the German presidency.
Evaluation of financial market reforms
At their Washington meeting the G20 finance ministers and central bank governors also discussed the issue of financial market regulation. Mr Weidmann remarked that the Financial Stability Board recently presented its proposals for a framework for the post-implementation evaluation of G20 financial regulatory reforms and launched a public consultation. The consultation is to be concluded by the G20 summit of the heads of state or government in Hamburg.
Another topic dealt with in Washington was green finance, which involves considering the impact of climate change in the financial sector. Mr Weidmann reported that there was
"broad consensus on the importance of the topic" among participants and that support for this work was "almost unanimous". The Bundesbank president noted that the ministers and governors welcomed a short report by the Green Finance Study Group which presents options for encouraging environmental risk analysis in the financial sector. The objective of this work stream, Mr Weidmann explained, is to enhance the financial system's ability to mobilise private capital for "green" and sustainable investment. The draft voluntary recommendations of the industry-led task force on climate-related financial disclosure also met with support among the participants, Mr Weidmann said, adding:
"We encouraged large listed companies to adopt these recommendations on a voluntary basis."
Financial literacy and inclusion
Mr Weidmann remarked that the G20 finance ministers and central bank governors also made progress with respect to financial literacy and inclusion in a digital world. The Bundesbank president pointed out that, according to a report prepared by the OECD, many countries are already pursuing national strategies to improve financial literacy, though he went on to comment:
"Many, however, are neglecting digital media, which is a missed opportunity. After all, digital media makes financial services accessible to many people." Mr Weidmann emphasised that he considers it a very good thing that the G20 member states are paying more attention to financial education and developing national programmes on a harmonised basis.
Further development of global economic governance
In summarising the results achieved in Washington, the Bundesbank president also spoke of global economic governance. He pointed out that at the meeting of G20 finance ministers and central bank governors in Baden-Baden, agreement was reached that the current system of global economic governance must evolve to meet emerging and future challenges. It was therefore agreed that an eminent persons working group should be formed to deal with this issue. The group will be chaired, Mr Weidmann continued, by the Deputy Prime Minister of Singapore, Tharman Shanmugaratnam.
"This group will be tasked with reviewing key issues relating to global economic and financial governance and focus particularly on the work of international financial institutions," Mr Weidmann explained, and concluded by emphasising:
"The G20 is taking the lead to foster debate on this important topic."
G20 the best forum
In his remarks, besides growth prospects, Federal Finance Minister Wolfgang Schäuble also spoke about the G20's "Compact with Africa" initiative, he hailed as
"a good example that multilateral cooperation is still working quite well, despite the swan songs we sometimes hear these days." Mr Schäuble continued:
"There is no way we could solve problems without cooperation, be it political or economic. The G20 is still the best forum we have in that regard."