World leaders yesterday closed in on a deal to jumpstart the sputtering global economy at one of the most important summits of recent decades.
After sharp differences over how to restore confidence, representatives of US President Barack Obama and other G20 leaders agreed the IMF could get up to US$500 billion in extra funding and a tax haven black list could be drawn up.
The British summit hosts expressed confidence an agreement would be clinched from the divisions at the meeting, which is being widely watched by markets and has sparked anti-capitalism riots in London in which one man died.
British Prime Minister Gordon Brown said in his opening speech to the summit that there was a “very high degree of consensus.”
The summit has focused on measures to regulate financial markets, a clampdown on excessive corporate salaries and tax havens and increasing funding for the IMF.
Delegations were discussing ways to find hundreds of billions of dollars for the IMF and other institutions, diplomats said.
There was broad agreement on drawing up a “shame and name” blacklist of tax havens to force changes in banking secrecy.
Tax havens that refuse to share information with other countries will face “sanctions,” Stephen Timms, financial secretary to the British treasury, told reporters.
“In due course there will be a list produced of countries that don’t sign up ... what’s being discussed today is the timing,” he said. “The era of banking secrecy is over.”
A draft summit communique also called for restrictions on bonuses for bankers to discourage short-term risks.
UN Secretary General Ban Ki-moon warned in an article for Britain’s Guardian newspaper that more than economics was at stake in London.
He said that unless decisive action was taken, the crisis could lead to a “growing social unrest, weakened governments and angry publics who have lost all faith in their leaders and their own future.”
Inside the summit, rifts “persisted” on how to draw up a new rule book for international finance and stimulus measures and combat protectionism, Britain’s Business Secretary Peter Mandelson told reporters.
France and Germany have demanded tough action by G20 leaders on regulation of global finance.
Brazilian President Luiz Inacio Lula da Silva, who last week blamed “white people with blue eyes” for the global economic crisis, tried to dampen expectations for the summit’s final statement.
“We cannot leave with nothing,” he said, noting that traders around the world were looking to London for a sign. “We can only hope for the best possible agreement.”
Meanwhile, Russia yesterday expressed regret that the idea of a new supranational currency that could in the future replace the dollar as a reserve currency was not on the table at the G20 summit.
Russian President Dmitry Medvedev told the economic gathering in London that it was important to address ways to improve the global currency system in the coming months, said a Kremlin official familiar with the matter.
A list of new regional currencies also has to be expanded to boost the global currency market which currently remained unstable, Medvedev said.
However, he cautioned that Russia did not seek to weaken the established currencies like the dollar, the pound or the euro.