G20 Sherpa meeting preview
Quietly tomorrow, while Europe’s trading markets are closed, while Chinese and American officials haggle over market access and exchange rates in Beijing, sherpas from the Group of Twenty (G20) will gather in Canada. The media will likely focus on the meetings in Beijing and market activity from Asia to America. But the regulatory policy directions emanating from the Canadian G20 meeting will have greater strategic significance for firms subject to financial regulation and companies that rely on them for access to capital. The week will end with an OECD ministerial in Paris and the latest projection regarding global growth. Do not expect to hear any soundbites associated with early exit from emergency fiscal and market support measures next week.
This note provides trend analysis regarding key issues consideration in the G20 on Monday, in the context of existing market and regulatory policy conditions. The starting point for analysis are the actions taken this past week in Japan, Italy, Brussels, Washington, and Berlin that set the stage for this week’s various meetings. Some of those actions would have attracted front page attention from the media in normal times; but these are not normal times.
The overall picture that emerges is one of continued convergence on a range of substantive policy issues. At the same time, the incentives for sovereigns to act together continues to deteriorate as the European sovereign debt crisis grinds on. Consequently, it is a situation which benefits the first mover, in the hopes that others will follow the lead. For the foreseeable future, volatility in the policymaking community will thus remain high, as success in driving political consensus will generate tangible economic benefits at home at a time when those economic benefits are most needed.
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