Sunday, September 27, 2009

World leaders agree: put a stop to bonuses

At the conclusion of the meeting between the leaders of the world’s 20 largest economies on Friday evening, it was clear that the sensitive issues of compensation levels and caps for bonuses were given a coordinated global answer. The discussion on how the world is to respond to the climate threat however still remains unresolved, with only 73 days to go until the UN Climate Change Conference in Copenhagen.

The issue on the top of the agenda ahead of the G20 meeting is how world leaders are to meet the global economic and financial crisis. Ahead of the Pittsburgh meeting, the EU has pushed for increased transparency and more effective regulation of the financial markets. This received a great deal of support and the G20 group has now agreed on stricter capital requirements and bonus regulations in the banking sector. They also agreed to coordinate and implement exit strategies, i.e. how the coordinated stimulus measures are to be phased out without creating new economic problems. And this means a lot when those sitting around the negotiating table represent 85 per cent of the world economy.

"I am pleased that we have succeeded in coordinating the largest economies in the world on these important issues", said Prime Minister Fredrik Reinfeldt at the closing press conference after the meeting.

Realistic expectations

Minister for Finance Anders Borg further noted the need for realistic ambitions, in spite of the coordinated G20 position.

"This is not the last financial crisis that the world will face. And although we have now agreed on bonus regulations, we can never regulate away greed. It is a natural part of human nature. But after the very strong statements from G20 and the larger financial institutions of the world, it would seem very provocative if the banks still would return to their previous behaviour that led to this crisis in the first place", said Anders Borg.

Barack Obama put forward an idea of an extra meeting

There was not as much progress made on the climate issue. Fredrik Reinfeldt, together with the President of the European Commission José Manuel Barroso and other European leaders, made it clear that there is a great need to reach an international agreement in Copenhagen. This opened for closer discussions in the climate issue, and the President of the United States Barack Obama put forward an idea of an extra meeting before the UN Climate Change Conference in Copenhagen in December.