Thursday, July 16, 2009

G20 Summit UK, updates and summary

G20 Summit concluded in the UK. There had been a lot of speculations and probabilities doing the rounds before the Summit as the world awaited the outcome of the Summit amidst the global economic slowdown. There were a lot of pre assumed probable differences between the 20 largest nations of the world. However, the Summit came out to be a success where major consensus were reached and big decisions taken. We have tried to summarize the outcome of the Summit here so as to draw a point-wise referrer and its effect on the future of the Global Economy.

The Decisions and Steps:

1 The global leaders have pledged to contribute $1.1 trillion to uplift the global economy which is at its rock bottom presently. This US$1.1 trillion fund will be available to member nations through IMF (International Monetary Fund). This “uncountable zeros fund” will help boost the economy of the world and will create more opportunities of jobs and industrial development. We will not be wrong if we call it a Virtual Stimulus when no direct stimulus package has as such been announced.
2 The $1.1 trillion will include the IMF’s special withdrawal money of $250 Billion. To be precise, the IMF member nations can withdraw up to $250 bn from the allotted $1.1 trillion as Special Drawing Rights.
3 $250bn has been additionally allotted to the IMF as a trade finance wallet to boost and widen global trade.
4 A stronger regulation has been planned on the Credit Rating firms so that they come out with the true picture of the market.
5 Tax Havens which hide information about secret accounts, will be blacklisted. Jersey, Monaco, Cayman Islands allow people to open Bank Accounts with numbers and not names. These will fall under the Black list.
6 The IMF will also triple its fund bank by receiving $500bn as additional store of funds.

The Probable ‘Bright Side”

The G20 Summit decisions have catapulted the hopes of the world to get bailed out of the prevailing economic crises. It’s a major confidence booster for the nations across the world. There will be increased lending from IMF and this is going to act as a booster to the exchange of foreign currency. The more the exchange of foreign currency, higher will be the generation of revenue. Financial regulation will be strengthened as desired by most developing countries. This would act as a stimulus resulting in foreign investments. Foreign investments would in turn create more jobs thus reducing the financial insecurity amongst the common people.

A new world order has been laid to undertake a fiscal expansion which would act as a jet pack to u-turn the sinking economy of the world.

The “Dim Side”

Though the decisions taken in the G20 will boost the world economy and bail the reeling nations out of the global economic crises, these also have some Dimmer shades. Firstly, it might happen that the $1.1 trillion gets consumed by the bigger economies. So there has to be strict vigilance on the fund flow. There can be nations which can take out more than required aid from the IMF in order to overcome their financial insecurity. There have been, not so loud agreements on killing protectionism amongst developed nations and this might result in some negativity in the future trade practices. We cannot see a clear redundant plan in case of a further crisis. There should have been talks on more bilateral ties to ensure the free flow of trade amongst nations.

What starts well, Ends well

The G20 Summit UK has however been a successful meet of the world’s largest nations and it was good to see that the concept of globalization has been given a new better meaning. The emergence of a new World Order is most welcome across the globe. Let’s keep our fingers crossed and wait and watch the results of the decisions taken, after the same get executed.

Linus Orakles
http://www.authorclub.info/

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