Coordinating financial sector reform is also proving to be challenging for the G20 due to increasing national differences.
The long debated effort to agree upon a globally uniform bank levy (to recoup funds from banks to cover costs of government intervention) failed in Toronto.
In Toronto, the G20 recognized that more work is needed to:
- Meet the commitments of prior summits
- Call for stronger rules over financial supervision
- Support efforts to improve insolvency processes and strengthen resolution powers
The G20 continued its call for a strengthened financial market infrastructure, including improved transparency and oversight of hedge funds, credit rating agencies and over-the-counter derivatives.
Revising the rules for banking capital and liquidity
Several key G20 commitments, including a revised global regime for bank capital and liquidity, are not expected until the November Summit.
The Toronto Communiqué did address some important aspects related to the work under way to revise the amount and quality of capital that banks will be required to maintain to withstand future stresses.
The leaders are clearly placing bank supervisors under tremendous pressure to deliver on the revised capital and liquidity standards by the Seoul Summit.
Flexibility shown for national circumstances
Nonetheless, the G20 recognized that the new capital standards will have to be phased in over a timeframe, reflecting different national circumstances.
Permitting a longer transition for implementing the new standards is a positive development given the nature of some of the expected changes.
Intense debate over aspects of the revised capital and liquidity standards is expected to continue; along with ongoing pressure from banks in geographies that are concerned that overly stringent capital levels will harm their ability to lend.
The long debated effort to agree upon a globally uniform bank levy (to recoup funds from banks to cover costs of government intervention) failed in Toronto, with G20 members instead agreeing to disagree, and settling for national approaches.
The leaders also supported measures for resolving and winding up financial institutions in crisis without taxpayers bearing the cost. The FSB will issue a final report in Seoul based on principles agreed and released in Toronto. They agreed to develop plans for major cross-border institutions by the end of 2010.
Confronted with continuing large national deficits, governments are under pressure to recoup tax revenue.
Focus on tax havens and information agreements
To this end, the G20 continued its focus on tax havens, looking to the Global Forum to step up its efforts and for countries to continue to expand information sharing.
The G20 recognized that over 500 tax information agreements among tax authorities have been signed since the G20 Summit in London last April.
Leaders address impact of corruption on markets
The G20 leaders also focused in Toronto on corruption and its adverse impact on markets and fair competition.
The G20 agreed to establish a working group to develop recommendations in time for the Seoul Summit to assist international anti-corruption efforts.
These recommendations will address:
- The need to adopt and enforce anti-bribery rules
- Fight corruption in both the public and private sectors
- Prevent access of corrupt persons to global financial systems
- Protect whistleblowers
