G-20 Toronto Summit: Progress Since Pittsburgh
Historic G-20 actions have helped restore growth and jobs, and are on track to build a stronger, safer global financial system. That is why the Pittsburgh Summit made the G-20 the leading forum for international economic cooperation, and why ongoing engagement with the G-20 is a key component of the Obama Administration’s strategy to ensure global recovery. At Toronto, the G-20 leaders agreed that their highest priority is to safeguard and strengthen the recovery and to lay the foundation for strong, sustainable and balanced growth. They agreed to carry through with their existing plans to support recovery, and that the fiscal consolidation necessary to restore sustainable public finances over time needs to be calibrated to protect the recovery and tailored to national circumstances. This pledge builds on the progress that has been achieved since President Obama and the other G-20 Leaders promised in London to do whatever was necessary to pull the global economy back from the brink, and their agreement at Pittsburgh to work together to transition to a more balanced pattern of global growth and create a safer, stronger international financial system.
At the London and Pittsburgh Summits and again at Toronto, the G-20 countries have come together to create a record of achievement:
Strengthening the recovery
- The G-20’s commitment to do whatever was necessary to ensure recovery halted the dangerous, synchronized global fall in economic activity after the worst financial and economic crisis in generations, and allowed the global economy to resume expansion.
- The United States’ economy, which was shrinking at an annual rate of 6 percent at the time of the London Summit, is now growing at close to 3 percent – the largest swing in growth in 50 years. Thanks to the action the U.S. took to repair our financial system and the strong policy action to support growth, the U.S. economy has expanded at an average annualized rate of 3.6 percent during the recovery, above the 2.4 percent weighted average growth rate for the other G-7 countries.
- The non-partisan Congressional Budget Office estimates that the American Recovery and Reinvestment Act has boosted the level of real GDP by between 1.7 and 4.2 percent through the first quarter of 2010; increased the number of people employed by between 1.2 and 2.8 million; and helped many others move from part-time to full-time employment.
- The Obama Administration is committed to putting U.S. public finances on a sound and credible medium-term trajectory. That is why the Administration will cut the budget deficit it inherited in half by FY 2013 and work to reduce our fiscal deficit to 3 percent of GDP by FY 2015, which will stabilize the debt-to-GDP ratio at an acceptable level in that year.
Financial repair and regulatory reform
- The U.S. has led a global effort to repair and reform the global financial system.
- The Administration put in place a framework for recapitalization of the banking system and undertook stress tests that were unprecedented in their transparency at the level of individual institutions. Although this was controversial at the time, it proved decisive in improving market confidence, raising new private capital and repairing bank balance sheets.
- The G-20 welcomed Europe’s decision to bring greater transparency to its banking system by disclosing the results of its stress tests on leading European financial institutions.
- The U.S. is the on the verge of enacting the most sweeping financial reforms in seventy years. The reforms will provide regulators with the tools needed to curb the kind of excessive risk-taking that led to the crisis and assure that the firms that pose the most risk to the financial system can be closed without putting the rest of the financial system at risk. Regulators will now have the ability to shut down and break apart failing financial firms in a safe, orderly way. This reform ensures a safer, more transparent derivatives market by creating a comprehensive framework of oversight, protections, and disclosure for the over-the-counter derivatives markets. Shining light on this sector will help Main Street companies to manage their commercial risks more effectively. It will make sure that American families and businesses never have to foot the bill for irresponsibility on Wall Street. And it creates the strongest consumer financial protections in American history.
- In Toronto, G-20 Leaders welcomed the U.S. regulatory reform bill and agreed that tough new capital and liquidity standards are at the core of the international agenda for financial reform. They called on negotiators to reach agreement by the time of the Seoul Summit on a new capital framework to ensure that banks have the capital needed to withstand a shock of the magnitude we recently witnessed without requiring extraordinary government support. They are agreed that the financial sector should make a fair and substantial contribution towards paying for any burdens associated with government interventions.
- These reforms are delivering on our Pittsburgh commitment to create a fundamentally stronger financial system than existed before the crisis. They put in place the foundation the U.S. and the world needs for a concerted global effort to raise standards together in order to build a safer, stronger global financial system.
Modernizing the institutions of international economic cooperation and addressing challenges to our future security and prosperity
- The modernization of the architecture of international economic cooperation that started with the decision in Pittsburgh to make the G-20 the premier forum for global economic cooperation continued with agreement to increase the voice and vote of developing and transition countries at the World Bank.
- The U.S. helped mobilize nearly a trillion dollars to help the international financial institutions fight the spread of the crisis.
- At Toronto, the G-20 fulfilled its Pittsburgh commitments and agreed to historic recapitalization and transformative reform across all multilateral development banks (MDBs) that will enable them to nearly double their lending.
- At Toronto, G-20 Leaders and other key stakeholders launched a global small and medium-enterprise (SME) Finance Challenge, a unique financial inclusion effort aimed at helping SME entrepreneurs grow their businesses.
- Following through on their Pittsburgh commitment, G-20 Leaders in Toronto welcomed the launch of the Global Agriculture Food Security Program, which will provide predictable financing, raise rural incomes, and build sustainable agricultural systems.
- The United States has set out the steps it will take to meet the Pittsburgh commitment to phase out inefficient fossil fuel subsidies. Such subsidies impede new investment in clean energy and encourage over-consumption of fossil fuels.
- The G-20 Leaders agreed at the Toronto Summit to extend their common agenda to include the fight against corruption. An experts working group will provide Leaders with practical recommendations on how they can work together to enforce strong rules against bribery, to prevent corrupt individuals from accessing the global financial system, to cooperate in the recovery of illicit assets, and to protect whistle-blowers who stand up against corruption.