G20 Summit Tackles Economic Recovery

Leaders at the recent G20 summit in Toronto have abandoned a plan for a global bank levy and agreed on a longer timetable for banking reforms. Banking capital reforms, which are set to begin rather than be completed in 2012, aim to enable banks to withstand stresses associated with the recent financial crisis without extraordinary government support. When the new reforms are fully implemented, the amount of capital will be significantly higher and the quality of capital will be significantly improved.

Despite the lack of a general consensus on a global bank levy, some governments including France, Germany and the UK will look to introduce a similar levy within their countries. Canada, Japan, Brazil and Australia, whose banks did not need government bailouts during the crisis, were among the countries opposing the levy. In addition, there was a non-binding pledge to halve budget deficits by 2013 and balance budgets from 2016.