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Understanding the G20 and the London Summit

Updated on March 31, 2009

On April 2, 2009, the G20 major economies are meeting at the London Summit (an event some are calling the G20 Summit) to discuss the global economy and the changes that have been taking place within that economy. This major meeting of the G20 economies could prove to be an important launching pad for some serious changes to the global economy. This article takes a look at what the G20 is, what the purpose of the London Summit will be and what we can expect to result from this G20 Summit gathering.

What Is The G-20?

The first thing that must be understood in order to make sense of the purpose of the G20 Summit is what exactly the G20 is. It’s a group of leaders from around the world who join together to discuss global economics. The group is comprised of representatives from 20 economies – the 19 largest economies in the world as well as the EU economy. The representatives are either central bank governors or finance ministers from those economies. In addition to these representatives, there are representatives from other major financial institutions such as the International Monetary Fund and the World Bank.

The purpose of the group is to come together to discuss issues of global economic importance. The goal of the group is to work together to review and discuss policy issues and approaches to dealing with the global economic system. The hope is that this will lead to an open exchange of ideas about the global economy that ultimately promotes financial stability around the world. By bringing together the key leaders from the major economies and financial institutions around the world, everyone’s voice can be heard regarding the issues that affect the global economy.

What Is The London Summit?

The London Summit is the name of the April 2nd meeting that is planned for the G20 economies. There are three major issues that are planned for discussion at this particular meeting of the G20 economies. Those three important issues are as follows:

1. Address the current global economy with attention to the problems that we are facing in terms of recession and employment. The goal is to consider global solutions to the need to re-stimulate the global economy in order to improve conditions for individuals around the world.

2. Discuss methods of reforming the world’s international financial institutions (which include the World Bank and the International Monetary Fund) in order to improve their ability to serve the global economy.

3. Review the action plan created at the last summit meeting which was held in the United States back in November of last year. The goal here is to check on the progress of past action plans with specific attention to reforming the financial sector to improve global economic conditions.

By covering these three points, the London Summit will be taking a close look at how to improve the conditions that we are facing in today’s economy from a number of fronts including attention to the development of plans that the G20 came up with in the recent past.

What Results Can Be Expected from the London Summit

Whether or not these types of global meetings have any impact on the economy at all is a controversial issue. In fact, there have been many protests of the London Summit taking place this week from groups that want to raise awareness of economic issues that they feel are not addressed or improved by the G20 meetings. However, there is some potential for change to come from the London Summit. The main purpose of these meetings is to open up discussions for change in the global economy and we all know that this is something that is desperately needed right now.

However, it is also possible that the leaders attending this summit meeting will be unable to come up with an agreement about the best methods of moving forward to stimulate the global economy. A major issue that President Obama is planning to bring up is the issue of stimulus spending. He believes that more economies should be spending money in order to stimulate their economies and therefore to improve to global financial situation. However, most other major economies do not agree on this approach. His discussions here could open up some of the leaders to taking this approach or it could end up resulting in an impasse between the leadership of different global economies.

Ideally, the London Summit has the potential to be a place where decisions are made that would allow the world’s top economies to move forward together in a coordinated effort to improve the global economy. If so, what we would likely see would be small changes taking place over the next year or so. These changes would be monitored through review at future G20 Summit meetings and hopefully we would see progressive change in the global economy that would benefit each of these individual economies.

How well this ideal situation works out is only going to be determined by time. Like with all politics, there will likely be a little bit of meeting of the minds and a whole lot of dissension among group leaders at the London Summit. Hopefully we will at least see some positive ideas for change which may be adopted by some of the economies to begin improving the financial situation for everyone around the world. If nothing else at least we know that there is continued discussion among leaders about how to make things better for the rest of us.

Comments

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  • skydiver profile image

    skydiver 

    9 years ago from UK

    Hi Kathryn,

    Thanks for answering my request with this Hub. It gave me a clear overview of what was going on :)

  • Staci-Barbo7 profile image

    Staci-Barbo7 

    9 years ago from North Carolina

    Kathryn, I think that most major economies realize the imprudence of attempting to stimulate their individual economies through extreme deficit spending, which cannot be sustained. This approach inevitably devalues the nation's currency.

    In America, we will eventually have to "pay the piper" with devalued currency, which will discourage continued foreign investment in America, which in turn will result in a shortfall of means to finance deficit spending. At that point, unless our nation makes a radical change in its monetary & fiscal policies, a perpetually weakened dollar may begin to lose its status among world economies as a safe harbor currency. This loss of economic status could very well translate into America's losing serious economic and political clout in the global arena.

  • SoManyPaths profile image

    SoManyPaths 

    9 years ago from West Coast USA

    They will probably have more rules for transparency of financing.

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