Key figures: Gordon Brown (host), Barack Obama, Angela Merkel, Nicolas Sarkozy, Hu Jintao, Manmohan Singh, Luiz Inácio Lula da Silva, Dominique Strauss-Kahn (IMF)
Summary
The second summit of G20 leaders was held on April 2, 2009, at the ExCeL exhibition centre in London, chaired by British Prime Minister Gordon Brown. Convened in the depths of the global financial crisis and the sharpest contraction in world trade since the 1930s, the one-day meeting produced a communiqué — the “London Summit Leaders’ Statement” — that committed the group to “an additional $1.1 trillion programme of support to restore credit, growth and jobs in the world economy.”
The headline package trebled the resources available to the International Monetary Fund to $750 billion, backed a new $250 billion general allocation of Special Drawing Rights, provided at least $250 billion of support for trade finance, and secured a further roughly $100 billion of additional lending by the multilateral development banks. Leaders also agreed to use resources from agreed IMF gold sales for concessional finance for the poorest countries. In parallel, the summit established a new Financial Stability Board — a successor to the Financial Stability Forum with a broadened membership and mandate — to work with the IMF on regulating the global financial system, and it named specific commitments on hedge fund oversight, credit-rating agencies, and action against non-cooperative “tax havens.”
The London meeting was the summit for U.S. President Barack Obama’s first major overseas trip after his January inauguration, and it drew large anti-globalization and anti-capitalism protests in the City of London in the preceding days.
Significance
London established the G20 leaders’ format — inaugurated in Washington in November 2008 — as the principal forum for managing the crisis, a role formalized later in the year at the G20 Pittsburgh Summit. By coordinating fiscal stimulus, expanding IMF firepower for emerging and developing economies, and pledging to avoid a retreat into protectionism, the summit is widely credited with helping to arrest the collapse in confidence and trade during 2009. The creation of the Financial Stability Board provided the institutional vehicle through which the post-crisis regulatory agenda — culminating in the Basel III bank-capital rules — would be developed.
Sources
- 2009 G20 London Summit — Wikipedia
- London Summit — Leaders’ Statement, 2 April 2009 (official communiqué)
- The April 2009 London G-20 Summit in Retrospect — Brookings Institution