The G-20, comprising the finance ministers and central bank governors of 19 countries and a representative from the European Union, just completed their meeting in St. Petersburg, Russia. These countries account for a huge 86% of world GDP, 80% of global stock market capitalization and 94% of global bond markets as of year-end 2012. This means that any policies agreed to or even the failure to reach agreement on some policies can have major implications for the global economy and financial markets for years to come.
ItaEUR(TM)s crucial that the member countries, to the extent possible, agree to coordinate their policies to achieve greater economic and financial stability as well as sustainable growth worldwide. The failure to do so could adversely affect not only individual countries but all the roughly 220 countries in the world. For example, when big banks operating globally get into trouble, it is crucial that countries agree on how to resolve them if the too-big-to-fail problem is ever to be adequately addressed and future bailouts avoided.
Recent developments in Syria diverted attention away from the important economic and financial agenda of the G-20 meeting. Tension already exists between Russia and the U.S. due to the Edward Snowden affair, but it has grown considerably amid RussiaaEUR(TM)s lack of support for possible U.S. military action against the Syrian government. RussiaaEUR(TM)s share of global GDP ranks it among the top 10 countries today, and it is expected to move even higher in the coming years. Thus, Russia is a key player in any attempt by the member countries to increase their policy coordination.
The emerging markets have grown vastly more important in recent years and will continue to do so over time — despite the current difficulties faced by many of them — which makes their role in the G-20 ever more essential. After the global financial crisis of 1997-1998, it became clear that the G-7, which consisted of the rich industrial countries, should no longer hold center stage. To promote global growth and stability, it is now widely recognized that the broader group making up the G-20 must be intimately involved in global governance if progress benefiting all countries is to be achieved.