Finance ministers and central bankers from the Group of 20 countries will spend much time discussing how to step up global cooperation in improving fiscal soundness and stem Europe's debt problems from spilling over into the global economic rebound when they meet this week, observers said Thursday.
The two-day meeting to be held from Friday in this southern port city of South Korea will also provide a chance to exchange opinions on diverse pending issues among the member nations to prevent the repeat of a global crisis and achieve strong and sustainable growth, they added. A preparatory meeting among vice finance ministers will start from Thursday.
The gathering comes amid rising concerns that sovereign debt problems in some euro-zone countries including Greece might dampen the fledging global recovery. The focus has shifted from recent meetings, where nations focused more on global cooperation in seeking exit strategies or financial regulation, as they believed the economy was quickly moving out of the downturn.
"One of key agendas will be the issue of fiscal soundness," South Korea's Deputy Finance Minister Shin Je-yoon told Yonhap News Agency. "Participants will likely gather their heads to send a message to the market in connection with the issue at a time when it has gained more attention than ever these days."
The meeting -- the first minister-level G20 talks held in Korea -- will consist of five sessions, the first of which starts Friday night, when finance ministers and central bankers will have in-depth talks on the fiscal soundness agenda, Seoul officials said.
They will be briefed on latest economic conditions and have talks about global cooperation in pushing for exit strategies and other pending economic issues concerning their countries.
"The first session is a working dinner chaired by Finance Minister Yoon Jeung-hyun during which finance ministers, central bankers and heads of major international financial organizations will have the discussion," a ministry official here said. "This is the first time that they are gathering without other staff on hand, meaning that they are seeking to have more frank and in-depth talks with each other."
During the second session on Saturday, the policymakers will deal with "a basket of policy options" to be proposed by the International Monetary Fund to achieve a framework for a strong, sustainable and balanced growth.
The issue of financial regulation will be touched upon during the subsequent session, allowing G20 countries to discuss ways aimed at preventing the recurrence of a global crisis seen after the collapse of Lehman Brothers in late 2008.
A bank levy will be likely among many options under consideration, although each nation has different ideas on the tax scheme designed to impose taxes on banks and other institutions accused of causing market turbulence.
The IMF is expected to submit its policy option to the G20 officials during this week's meeting. Based on the proposals and opinions from each nation, its final version is expected to be on the table of G20 summit talks to be held in Canada later this month.
"This is an important issue where many have strong opinions," IMF managing director Dominique Strauss-Kahn told Yonhap in an interview.
"The G20 has asked the IMF to study the issue and prepare a report to be discussed by the G20 leaders at their scheduled meeting in June in Toronto. In preparing this report, we have also sought to listen to the views of the others," he added.
In April, the IMF suggested two types of solutions to the G20 officials.
The first type is aimed at asking each nation to pay money upfront, before any crisis occurs, while the other is intended to levy taxes on profits and remuneration paid by financial institutions in a bid to secure money to brace for yet another worldwide crisis.
"We think two types of tax can play a role, provided they are coordinated with regulatory reforms and enhanced supervision," the IMF head said.
However, it seems tough to produce an agreement as countries are still divided over the details of the tax scheme.
The United States and Britain are in favor of taxing banks to recoup taxpayer money spent on bailing out struggling financial firms. Canada and Australia, however, oppose the plan, claiming that their banking system did not cause a crisis and should be treated differently. South Korea has yet to decide.
Recognizing such differences, Finance Minister Yoon told reporters in a recent press briefing that each nation is expected to agree only on general principles this time, noting there are two options.
One is to slap a levy on banks or large-sized financial institutions that cause chaos by taking excessive risks. The other is to make financial institutions pay the price for their risk-taking, but not to impose too much a burden on them, which could discourage them from supporting the real economy, Yoon said.
"I expect that the issue will be dealt with in this meeting, but we should wait until the Seoul summit in November to see any conclusion," he added.//Yonhap
The two-day meeting to be held from Friday in this southern port city of South Korea will also provide a chance to exchange opinions on diverse pending issues among the member nations to prevent the repeat of a global crisis and achieve strong and sustainable growth, they added. A preparatory meeting among vice finance ministers will start from Thursday.
The gathering comes amid rising concerns that sovereign debt problems in some euro-zone countries including Greece might dampen the fledging global recovery. The focus has shifted from recent meetings, where nations focused more on global cooperation in seeking exit strategies or financial regulation, as they believed the economy was quickly moving out of the downturn.
"One of key agendas will be the issue of fiscal soundness," South Korea's Deputy Finance Minister Shin Je-yoon told Yonhap News Agency. "Participants will likely gather their heads to send a message to the market in connection with the issue at a time when it has gained more attention than ever these days."
The meeting -- the first minister-level G20 talks held in Korea -- will consist of five sessions, the first of which starts Friday night, when finance ministers and central bankers will have in-depth talks on the fiscal soundness agenda, Seoul officials said.
They will be briefed on latest economic conditions and have talks about global cooperation in pushing for exit strategies and other pending economic issues concerning their countries.
"The first session is a working dinner chaired by Finance Minister Yoon Jeung-hyun during which finance ministers, central bankers and heads of major international financial organizations will have the discussion," a ministry official here said. "This is the first time that they are gathering without other staff on hand, meaning that they are seeking to have more frank and in-depth talks with each other."
During the second session on Saturday, the policymakers will deal with "a basket of policy options" to be proposed by the International Monetary Fund to achieve a framework for a strong, sustainable and balanced growth.
The issue of financial regulation will be touched upon during the subsequent session, allowing G20 countries to discuss ways aimed at preventing the recurrence of a global crisis seen after the collapse of Lehman Brothers in late 2008.
A bank levy will be likely among many options under consideration, although each nation has different ideas on the tax scheme designed to impose taxes on banks and other institutions accused of causing market turbulence.
The IMF is expected to submit its policy option to the G20 officials during this week's meeting. Based on the proposals and opinions from each nation, its final version is expected to be on the table of G20 summit talks to be held in Canada later this month.
"This is an important issue where many have strong opinions," IMF managing director Dominique Strauss-Kahn told Yonhap in an interview.
"The G20 has asked the IMF to study the issue and prepare a report to be discussed by the G20 leaders at their scheduled meeting in June in Toronto. In preparing this report, we have also sought to listen to the views of the others," he added.
In April, the IMF suggested two types of solutions to the G20 officials.
The first type is aimed at asking each nation to pay money upfront, before any crisis occurs, while the other is intended to levy taxes on profits and remuneration paid by financial institutions in a bid to secure money to brace for yet another worldwide crisis.
"We think two types of tax can play a role, provided they are coordinated with regulatory reforms and enhanced supervision," the IMF head said.
However, it seems tough to produce an agreement as countries are still divided over the details of the tax scheme.
The United States and Britain are in favor of taxing banks to recoup taxpayer money spent on bailing out struggling financial firms. Canada and Australia, however, oppose the plan, claiming that their banking system did not cause a crisis and should be treated differently. South Korea has yet to decide.
Recognizing such differences, Finance Minister Yoon told reporters in a recent press briefing that each nation is expected to agree only on general principles this time, noting there are two options.
One is to slap a levy on banks or large-sized financial institutions that cause chaos by taking excessive risks. The other is to make financial institutions pay the price for their risk-taking, but not to impose too much a burden on them, which could discourage them from supporting the real economy, Yoon said.
"I expect that the issue will be dealt with in this meeting, but we should wait until the Seoul summit in November to see any conclusion," he added.//Yonhap
reporter
Park Sae-jin
swatchsjp@ajunews.com