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G20 leaders promise tighter regulations
(Agencies)
Updated: 2009-09-26 14:13

PITTSBURGH: World leaders took credit Friday for pulling the economy "back from the brink," and promised a new world order of tighter financial regulation and more inclusive global governance to protect the world from future meltdowns.

G20 leaders promise tighter regulations
The leaders of the G20 Summit pose for a group photo at the G20 Summit in Pittsburgh, Pennsylvania, September 25, 2009. [Agencies]
G20 leaders promise tighter regulations

The gathering of the world's 20 top economies cautioned that the recovery remained fragile and agreed to keep stimulus plans, which include government spending and low interest rates, in place in their respective countries.

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Turning from the crisis-management of previous summits, the Group of 20 leaders pledged to set up more rigorous financial rules that would cut down on some of the risky behavior and excesses that have been blamed for rocking the global economy. And they vowed better coordination over economic policies.

"Going forward, we cannot tolerate the same old boom-and-bust economy of the past," US President Barack Obama said, speaking as the summit in Pittsburgh ended. "We can't grow complacent. We can't wait for a crisis to cooperate."

Obama had pressed for keeping the stimulus plans just such a course and praised the group's decision.

"Our coordinated stimulus plans played an indispensable role in averting catastrophe. Now we must make sure that when growth returns, jobs do, too," he said at a wrap-up news conference.

Obama said actions taken so far "brought the global economy back from the brink."

Reflecting the shift in the world's balance of power to Asia and Latin America, they made the G20 - which includes such emerging economies as China, Brazil and India - the lead group for tackling international economic issues in the future, eclipsing the older, Western-dominated Group of Eight.

"The old system of international economic cooperation is over. The new system, as of today, has begun," said British Prime Minister Gordon Brown.

"It's clear that the G8 without the G20, without the remaining 12 countries, is today incapable of deciding all the tasks before the world economy," Russian President Dmitry Medvedev said.

They agreed to require members to subject their economic policies to the scrutiny of a peer review process that would determine whether they were "collectively consistent" with sustainable global growth. They promised tighter and more coordinated financial regulation.

However, the G20 pledges lacked on details, and did not say, for instance, how the proposed peer review process would be enforced.

In the first international summit hosted by Obama, the G20 turned on greedy bankers, agreeing on measure to curbs their bonuses in a bid to encourage more responsible behavior.

According to the new agreement, bankers would only get part of their bonuses upfront, while the rest would be dependent on the long-term financial performance of the firm.

"There was unanimity around the table that the errors of the past won't happen again," French President Nicolas Sarkozy said. "I am very satisfied by what we decided."

EU leaders had called for links between bankers' pay and the companies' long-term performance and have sought to end bonuses. Sarkozy in particular has lobbied for better financial regulation, warning that the world risked another speculative bubble "which when it bursts would put our economies on the edge of the abyss."

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