G20 preview
The last issue of The Risk Telescope (on 6 June 2010) concluded as follows: “The stage is set for stalemate through mid-summer.” Despite the flurry of news surrounding China’s adjustments to its exchange rate regime last weekend, the expected stalemate has indeed materialized on the full range of economic and policy issues on the G20 agenda.
Regular readers will recall that most of the major policy issues under discussion within the G20 umbrella that generate most media attention (financial sector taxes; regulatory capital; regulation of “all” financial markets, instruments and firms; IMF reform) have long been slated for discussion and decision in November, not June of 2010. In other words, the midsummer G20 meeting has always been a placeholder meeting during which members can evaluate economic trends in order to make decisions in the autumn.
The sound of silence from the G20 this month regarding accounting convergence, IMF reform, regulatory capital, derivatives regulation, bank resolution, and tax policy seems deafening…particularly in relation to the loud and raucous debate occurring publicly with respect to cross-border economic policy coordination. Rather than be distracted by the rhetoric, readers are encouraged to listen to the G20 debate in the same way that one would listen to Count Basie’s music: the silence forms an integral part of the composition, and suggests the direction that may emerge later.
This note previews the structural shifts signaled by the trade and development focus associated with the June meeting. It then suggests how to view the silence on key regulatory policy initiatives in light of legislative efforts in Brussels and Washington. An analysis of outcomes will follow over the weekend.
