Twin objectives of promoting recovery in the global economy and to put in place a set of reforms in the international financial system to help prevent future crises of this type taking place are crucial for G-20, said a top US Treasury official.
"Both those key objectives are critically important to us -- the broad recovery agenda as well as the reform agenda," US Treasury secretary Timothy Geithner told a group of select seven foreign journalists, including one from PTI, on the eve of departure of the US President Barack Obama to participate in the G-20 Summit in London.
Geithner insisted that the G-20 countries together must take aggressive action on two fronts -- first to ensure economic recovery and restart global growth and second to reform the supervisory and regulatory framework to prevent such economic crises from occurring in the future, while encouraging innovation and growth.
G-20 is a group of 20 leading and emerging economies of the world representing more than 85 per cent of the global economy. For the second time in less than six months, the leaders of these countries including India are meeting in London on April 2 to develop a common approach to the current global economic crisis.
The First G-20 Summit was held in Washington in November.
Highlighting some of the key priorities identified by the US within these two frameworks, the US Treasury secretary said: "On the recovery front, we have a lot of support from macro monetary policy and fiscal policy in the pipeline."
Along with these macroeconomic policies, he said it is very important that 'we are working to stabilise, repair our financial system so that credit is available to support recovery'. Broad financial imperative is going to require different approaches in different countries, but it is a critical compliment to the broader recovery agenda, he argued.
Geithner said the US is committed to avoid protectionism and open trade and investment policy, which he argued is a critical part of any successful global approach to this crisis.
On the recovery agenda, he said the US wants to see a very substantial programme of assistance provided through international financial institutions to those emerging market economies and developing countries that are the most affected by the shortfall of an external demand and their financial private capital source.
On the reform agenda, the Treasury secretary said US objective is to put in place a very strong consensus on a set of stronger international standards for financial oversight.
The US, he pointed out, has laid out the objectives of the reforms that would guide them domestically to build a more stable financial system. "But we need to move together," he said.
"As part of that, we would support a substantial increase in a relative loading share of emerging economies. We want to see those changes come in reforms so that each of those institutions is more effective with a more balanced set of obligations and responsibilities," he said.
Responding to a question, Geithner said his impression is that the G-20 countries have a huge amount of common ground in tackling the basic priorities and objectives. "We have different challenges domestically, and so the precise mix of policies can differ based on that. But I think the broad imperative on the priorities that Obama laid out on the principal objectives of the reform agenda, I think there is a very strong consensus," he said.
"If you step back and look at the scale of the policies that are already now in the pipeline, there is a very substantial amount of support for demand, for reform, and I think, we all share an interest in making sure that there is a sustained level of support over time that commensurate with the scale of the crisis," Geithner said.