As one of the core responsibilities of the G20 and one of the major sources of risks in the global economy, a fruitful discussion on new thinking on global financial coordination is just what the doctor ordered.
In advance of the International Monetary Fund’s (IMF’s) Spring Meetings, American University and CIGI cohosted an event called New Thinking and the New G20 to discuss the results from a project funded by a partnership between CIGI and the Institute for New Economic Thinking (INET). The original project was directed by CIGI Senior Fellow Professor Barry Eichengreen and Professor Miles Kahler from American University, who appointed Professor C. Randall Henning from American University and Professor Andrew Walter from the University of Melbourne to lead the research activities. The project has already delivered several innovative papers (available here) several of which were presented at the event in Washington.
These papers have a strong focus on the role of emerging market economies in the global financial system and international standards setting. Specifically, four panels at the New Thinking and the New G20 event discussed financial spillovers and capital controls, currencies and liquidity, international financial regulation, and emerging market implementation. The authors provided a unique perspective to the global financial system because of their understanding of the major emerging market economies, with case studies from Brazil, China, India, and Turkey. A revised version of these papers will be developed into a book to be published by CIGI ahead of the G20 Leaders Summit that will take place in Antalya in November 2015.
Lord Adair Turner, INET Chairman, delivered the keynote speech, entitled "Debt, Imbalances and Secular Stagnation." As always, Lord Turner captivated the audience with his insights on the role of private debt in the slow global economic recovery. He suggested that three main issues needed to be mitigated in order to create a “more balanced global economy”: inequality, the concentration of wealth in real estate, and current account imbalances. Lord Turner also argued that secular stagnation was being driven by less nominal investment because large investments in information technology can be achieved at relatively low costs. The good news, he suggested, was that a demand side glut always has a solution. One solution is infrastructure investment which is currently at the heart of goals for the G20.
The workshop closed with a discussion of the major goals of the Turkish G20 presidency by Turalay Kenç, the Deputy Governor of the Central Bank of Turkey and G20 Deputy. Deputy Governor Kenç emphasized Turkey’s focus on three “i’s”: investment, infrastructure and inclusiveness. Kenç indicated that the main aim of the Turkish presidency is to develop a robust monitoring mechanism for the G20’s growth commitments, help establish concrete investment strategies, and improve the business environment and access to finance for small and medium-sized enterprises.
As finance ministers and central bank governors across the globe gathered at the IMF Spring Meetings to discuss the challenges in global economic governance, this workshop was the perfect time and place to launch a discussion on how the major emerging market and advanced economies of the G20 can work together to improve the stability of the global financial system.