The barricades across the City have been dismantled, the political dignitaries have gone home. As the dust settles on the G20 communique, regulators, financial institutions and their lawyers may pause to reflect on what was really achieved and what the future holds.
There is no doubt as to good intentions – or the scale of ambition – behind the summit. Agreement that a global crisis requires a global solution, and a pledge to do “whatever is necessary” to rebuild the world economy are big statements. They were also backed by a big number: $1.1trn (£675bn). This breaks down into more manageable sums allocated between the international financial institutions (such as the International Monetary Fund (IMF), World Bank and other multilateral development banks) primarily, to support growth in emerging market and developing countries. While large components of this package come from existing programmes of export guarantees or loans, this in no way diminishes the size of the governmental blank cheque. It does, however, raise difficult questions as to how the private enterprises that have become reliant on governmental handouts will wean themselves back onto private capital. This will be difficult for governments to get to grips with, raising contentious competition issues as the global economy recovers.
