World Leaders Vow to Act on Crisis

Posted by Reading Time: 2 minutes

World Leaders Meet in WashingtonNov. 16 – Facing the most serious global financial meltdown since the Great Depression, world leaders vowed on Saturday to undertake coordinated actions to revive the global economy.

The Washington summit, held amid serious challenges to the world economy and financial markets, was the first one for the G-20 since it was founded 1999 in the wake of the Asian Financial Crisis of 1997.

The current financial crisis has reshaped the economic map, and leaders of emerging economies called for a complete overhaul of the world’s financial institutions to give the developing and emerging economies a greater voice and representation in the world financial system.

While the countries’ stimulus packages mainly reflect response measures that were already underway, they were hailed as ambitious steps. With an eye on the incoming administration of President-elect Barack Obama, many of the thornier issues were left to be resolved next year. The group planned its next meeting for April 30, 101 days after Obama will be sworn into office.

The action plan that was laid out included immediate and medium-term measures to cope with the current global financial crisis. Sensing that a “broader policy response” was needed, the leaders said they would:

  • Continue their vigorous efforts and take whatever further actions are necessary to stabilize the financial system.
  • Recognize the importance of monetary policy support, as deemed appropriate to domestic conditions.
  • Use fiscal measures to stimulate domestic demand to rapid effect, as appropriate, while maintaining a policy framework conductive to fiscal sustainability.
  • Help emerging and developing economies gain access to finance in current difficult financial conditions, including through liquidity facilities and program support. The leaders stress the IMF’s important role in crisis response, welcome its new short-term liquidity facility, and urge the ongoing review of its instruments and facilities to ensure flexibility.
  • Encourage the World bank and other multilateral development banks (MDBs) to use their full capacity in support of their development agenda, and the leaders welcome the recent introduction of new facilities by the World Bank in the areas of infrastructure and trade finance.
  • Ensure that the IMF, the World Bank and other MDBs have sufficient resources to continue playing their role in overcoming the crisis.

The joint agreement was welcomed by the international community including the U.N. secretary general, Ban Ki-moon.

“The Secretary-general welcomes the Declaration of the Summit on Financial Markets and the World Economy, held in Washington D.C. today, which committed leaders to joint action,” said a statement from Ban’s office.