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Analysis
The G20 Leaders Summit on Financial Markets and the World Economy, edited by John Kirton

Meeting the Needs of the Times to Play a Constructive Role:
Reflections on the Tenth Anniversary of the G20

Dai Xianglong
Former governor, People's Bank of China
November 6, 2008
[PDF in Chinese]

The 1990s witnessed frequent crises in the international financial market, which posed severe challenges to the international financial system and the policy coordination of the international community. In September 1999, the ministers of finance and governors of the central banks of the G7 agreed, “to broaden the dialogue on key economic and financial policy issues among systemically significant economies and promote cooperation to achieve stable and sustainable world economic growth that benefits all”. This statement directly led to the establishment of the G20 and its first meeting in Berlin, Germany on Dec.15-16, 1999. From June 1995 to late 2002, I participated in the G20 meeting four times as the governor of the central bank of the People’s Republic of China.

The establishment of the Group of Twenty (G20) has met the needs of the international economic framework over the past few decades. Since the 1980s, the increasing significance of the emerging market economies, and the constant integration of the global economy and financial markets have highlighted the importance of strengthening international economic and financial cooperation and dialogue. The mission of the G20 is to promote the international agenda-setting, to discuss pending economic and financial issues, and to play an exemplary role. G20 members include representatives from all parts of the world, both developed and emerging economies with systemic importance, the European Union, and Bretton Woods institutions. Its establishment has filled the blank of international economic and financial governance structure.
One of the major achievements of the G20 in its early days was its work in facilitating internationally accepted standards and guidelines in order to improve economic and financial transparency and to strengthen the financial system. Since the terrorist attacks in the USA in September 2001, G20 members have stood firm against terrorist financing and advocated the participation of all countries. Relevant discussions of the G20 also contributed to the introduction of collective action clauses in international bond contracts, and the application of a set of informal codes of conduct among major sovereign lending countries. Recently, the G20 has become an important platform for discussing the Fund’s shares and representation reform.
While paying attention to international financial stability, the G20 probes long-term economic issues of interest to many member states. The G20 has played an important role in supporting globalization and ensuring that all countries including the poorest developing countries share the benefits of globalization. The G20 has become an integral part of the international system, having made valuable contributions to the improvement of global governance.

As one of the founding members of the G20, China has not only witnessed the development of the G20, but also participated in the discussion of various issues, with a view to promoting the realization of its mission. In 2005, as the chair of G20, China hosted a series of G20 meetings on the theme of “strengthening global cooperation to achieve world economic development in a balanced and orderly manner”.

As for the prospects of the G20, we should endow it with an even more important role in global economic and financial issues. With the development of globalization, constant expansion of international capital flows, and acceleration of fluidity, changes among major international currency exchange rates have become more complicated, and dialogue and the policy coordination between developed and emerging markets and other developing countries become more important for global economic and financial stability.

The outbreak of the sub-prime crisis exposed the insufficient capabilities of the Fund and other institutions in crisis forecast and response, and reflected the defects of the current global governance structure. I hope that the G20 will further specify its focus, face squarely with the most fundamental issues of the international financial system, and reflect the concerns of various countries promptly, so that it can provide more constructive and pertinent advice on the operation of the Fund and other international organizations.

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