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On the Way to a Global Economic Order

Report of the press conference with German chancellor Angela Merkel
and German finance minister Peer Steinbrück after the G20 leaders summit
Washington DC, November 15, 2008
[Transcript of briefing in German]

The world's leading industrial nations and emerging economies (G20) aim to cooperate more closely in future in order to overcome the financial crisis. The Summit on Financial Markets and the World Economy has identified an appropriate response to the crisis, declared Chancellor Angela Merkel. Together, the international community aims to make markets more predictable, underscored Federal Finance Minister Peer Steinbrück, which should ensure greater security and stability.

Over the next 100 days the G20 states intend to take about 50 emergency measures, reported Angela Merkel and Peer Steinbrück after the meeting.

The action plan adopted in Washington contains important steps that should lead to a global economic order, emphasised the Chancellor, and thus ensure an "international dimension of the social market economy.”

Regulation and Supervision without "Blind Spots”

The document, which was adopted by two dozen countries and representatives of international organisations, provides above all for more effective supervision of the financial world. There should not be any uncontrolled markets, market players or products anywhere in the world, stated the Chancellor.

Secondly, the G20 states intend to produce a common response to the economic challenges entailed by the financial crisis. The World Bank, for instance, is to be enabled to secure major investment projects of emerging economies and developing countries, especially private investments in the infrastructure of these states, which are now also suffering as a result of the credit crunch.

"We must do everything possible to restore global growth, or at least to ensure that growth rates do not fall too far,” said the Chancellor. As a major exporter, Germany has a particular interest in seeing the global economy recover.

For a Global Economic Order

The heads of state and government in Washington also spoke out decisively against any attempts to isolate markets and any new forms of protectionism. "We will do all we can to resolve the remaining problems at the Doha Round of trade talks before the end of the year,” declared Angela Merkel. The ministers responsible for trade were mandated to clear the obstacles still blocking the path of the ongoing round of world trade talks.

The G20 governments agreed for now not to put in place any new obstacles to trade within the next 12 months.

Concrete Proposals from Germany

Angela Merkel and Peer Steinbrück were thoroughly prepared for the G20 summit. A group of experts led by the economist Otmar Issing had drawn up well-founded proposals for the German government to take to Washington. These went from a risk map of the world to proposed modifications to the incentives system for executives, and an international lending register.

The experts came to the conclusion that better regulations for the markets are just as important as the engagement of the state to ensure low interests and greater liquidity.

New Responsibilities for Old Institutions

The governments of the European Union had already coordinated their objectives one week earlier in Brussels. One aim of the Europeans is to create a new role for the International Monetary Fund (IMF). With the appropriate authority and resources, the IMF could one day be responsible for monitoring international financial markets. Until then, the Financial Stability Forum, established by the G7 states, should in the opinion of the G20 be more closely linked to the IMF.

The Washington summit was the first meeting at which the industrial nations and the emerging economies cooperated so closely and so decisively. The Chancellor is convinced that "these 20 states reflect a fairly accurate image of the world as a whole”. Europe was represented at the summit by the heads of government of France, the United Kingdom, Italy, Spain and Germany.

The group of the 20 most important industrial nations and emerging economies (G20) is an informal forum intended to encourage dialogue among members with the goal of ensuring global economic stability. The summit meeting in Washington was the first to bring together heads of state and government. Since 1999 it has always been the finance ministers of member countries who meet.

Alongside Germany, Argentina, Australia, Brazil, China, France, the United Kingdom, India, Indonesia, Italy, Japan, Canada, Mexico, Russia, Saudi Arabia, South Africa, Korea, Turkey and the USA make up the G20. In Washington they were joined by Spain and the Netherlands.

The European Union is also a member of the G20, represented by the acting EU president and the European Central Bank.

Source: Bundeskanzleramt

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