Can 85% of the economy represent and serve the whole?

By Rachel Oppenheimer


Leaders of the Group of 20 (G-20), who represent 85 percent of the global economy's output, faced a long list of agenda items when they gathered on April 2 in London, England for their second summit, and many affected by the global crisis had their livelihoods resting on the event. Thousands of protesters had gathered in London on April 1st and 2nd to demonstrate against a variety of issues, mostly anti-capitalist or pro-environmental in nature. As the world combats a great recession, its leaders addressed how to stabilize financial markets, re-start economic growth, reform the global financial system, and aid developing and emerging economies.

The leaders of the world's largest economies reached an agreement following the summit to tackle the world's largest financial crisis with measures worth $1.1 trillion (£681 billion). Global G-20 media reacted with a mixture of cautious optimism and skepticism. While the French press praised G-20 politicians for regaining power over the world of finance and the pro-Kremlin Russian press credited Dmitri Medvedev for meeting other leaders with “proposals rather than evaluations,” India's Business Standard detailed the decline in Indian exports and expressed concern that “more countries will increase their levels of protection against imports despite the emphasis [at the G20] on preventing this.” President Barack Obama praised the agreement: “The only way out of a recession that is global in scope is with a response that is global in coordination,” he said.

To help countries with troubled economies, the International Monetary Fund's (IMF) resources will be tripled to $750 billion. “We have agreed to support a general SDR allocation which will inject $250 billion (£170 billion) into the world economy and increase global liquidity,” said a clause in the comunique issued by the G20 leaders. SDRs, or Special Drawing Rights, are a synthetic paper currency issued by the International Monetary Fund that has lain dormant for 50 years. By activating the IMF's power to create money, the G20 leaders have put a de facto world currency into play. One can only hope such monetary injections can strategically and positively impact international and family economic stability in the months to come.