Apropos David's and Gordon's posts, for years now, G-7 gatherings have served to highlight the group's waning relevance. Having China to lunch every summer made no dent in the global imbalances that landed us in the current puddle, and made the old-power finance ministers look less, not more important. As reform proposals mushroomed (e.g., Bradford and Linn at Brookings, Bergsten at the Peterson Institute), G-groups old and new seemed to just plod along in search of coherent missions.
Today's tandem rate cut is a hopeful sign for good old-fashioned macro coordination, especially in the wake of recent European flailing. The officially-coordinating cutters were the central banks of Canada, the United States, the United Kingdom, Sweden and Switzerland, along with the European Central Bank. This covers six out of the seven G-7 and ten out of the eleven (yes) G-10 (Japan cheered). China and a few other G-20 went along without admitting to formal coordination. This FT exposition is most helpful.
Wednesday's actions make the G-7 and IMF meetings in a few days a much more interesting prospect. Recent events do not exactly rebut criticisms of the G-7, but they may spur its morphing into a credible successor and/or prod a sensible evolution of the G-missions. To wit, Bloomberg reports a special meeting of G-20 finance officials this weekend (they will be in Washington anyway for the IMF/World Bank annual meetings).
It will be interesting to see the extent to which all this translates into regulatory convergence.
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