Brussels, 11/02/2015 (Agence Europe) - Economic prospects are favourable, even though the strength of the growth remains “uneven” between the member countries of the G20 and remains “weak, particularly in certain advanced economies, such as the euro area and Japan”, state the major global monetary policy-makers, meeting in Istanbul on Monday 9 and Tuesday 10 February.
To tackle the persistent risk of “stagnation”, which would be aggravated by an excessively long period of low inflation and low domestic demand, the 'G20 Finance' recommends the adoption of “accommodating monetary policies in certain economies”. The recent decision of the ECB to launch a vast programme for the buy-back of public and private debt instruments (European-style quantitative easing) “will support recovery in the Eurozone”, they note. On a budgetary level, the national policies must strike a balance between supporting growth and creating jobs on the one hand and maintaining public indebtedness at a viable level on the other.
In its winter economic forecasts, the European Commission predicts positive growth in every country of the EU, for the first time since 2007 (see EUROPE 11247).
Reiterating the commitment of the principal global economies to boosting investment, the 'G20 Finance' pledges to set in place a “robust framework” aiming to ensure that every member country is accountable for actions undertaken in this area. An initial report, which is expected for the November G20 summit in Antalya, will allow a review of the progress made on the implementation of the growth strategies.
On the reform of the global financial architecture, the monetary policy-makers take the view that “critical steps” have still to be taken to deal with the issue of the financial institutions that are 'too big to fail'. However, the submission of a “rigourous” impact study on the precise outlines of a new safety net (TLAC), which the 30 largest banks in the world must set in place from 2019, has been postponed until the Antalya summit at the earliest (see EUROPE 11196). The industry is doing all in its power to try to block this initiative, which is likely to be expensive. Additionally, the 'G20 Finance' has undertaken to finalise, by the end of this year, the methodology to identify non-banking financial institutions of systemic importance, such as central clearing houses. After this, recommendations on a prudential framework for these entities will be discussed.
Coming right in the wake of the Swissleaks scandal, the 'G20 Finance' also reiterated the commitments made to apply the automatic exchange of information for fiscal purposes, as recommended by the OECD (see EUROPE 11250). Work to prevent the tax optimisation of multinationals will continue, with a view to concluding by the end of 2015. (Mathieu Bion)