On February 24th, the second meeting of the G20 International Financial Architecture Working Group (IFA WG) was held in Shanghai, China. Organized by the People’s Bank of China and the IFA WG co-chairs, of note the Ministries of Finance of France and South Korea.
The G20, or Group of Twenty, started in 1999 as a meeting of financial ministers and central bank governors in the aftermath of the Asian financial crisis. However, the first actual Summit took place in 2008. The G20 members include 19 individual countries along with the European Union.
According to expert Sean King of Park Strategies in New York, the meeting normally focuses on economic issues to be influenced by the geopolitical factors in China and East Asia. Some of these issues include North Korea’s nuke tests and China’s recent aggressions in the South China Sea.
On the financial side of things, there was speculation that China might have to devalue the Yuan again and that it would come up during the Summit meeting. However, King speculated that China would devalue the Yuan after the meeting to avoid embarrassment—and that’s exactly what occurred. On February 29th, the Yuan declined to 6.5490 to $1 USD, its lowest level in three weeks.
Beyond the Yuan, other economic factors were discussed at G20 over the weekend. In fact, the participating countries discussed the following topics:
- How to better monitor and deal with capital flows, given tighter financial conditions and heightened market flux
- Ways to push forward the quota and governance reform of the International Monetary Fund, with the goal of completing the 15th General Review of Quota
- Improving the global financial safety net to ensure it remains adequate and effective and better able to mitigate systemic risks
- Promoting orderliness and predictability of sovereign debt restructuring processes
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