April 02, 2009
G20: The FSForum is Dead, Long Live the FSBoard!
Posted by David Zaring

The G20 is talking about spending big money, but the Times thinks it hasn't quite solved the fiscal stimulus dispute between the US/UK and Germany/France.  I'll leave it to Simon Johnson to explain whether the $750 billion for the IMF is the $750 billion he wanted or substantially less (it looks like they don't want to loan it all out at once, and there is also a sale of IMF gold reserves). 

But what about financial oversight?  Well, the international effort to put all the regulators in one room has gone unswimmingly at the so-called Financial Stability Forum which, it seems, meets regularly but does little.  I hear very little about the organization, and I try to listen.  So what better than a reorg and a new name?  Today, the G20 pledged

to establish a new Financial Stability Board (FSB) with a strengthened mandate, as a successor to the Financial Stability Forum (FSF), including all G20 countries, FSF members, Spain, and the European Commission.

Hmmm.  It's pretty much the "college of supervisors" that we predicted yesterday.  But there are some interesting details:

  • banker compensation: the G20 says "Payments should not be finalised over short periods where risks are realised over long periods."  Didn't think that executive compensation would find its way into a communique resulting from a global summit convened to save the world economy, but these are the heads of democracies, and presumably politics matters.
  • the Basel Committee - it failed to stop the crisis, but the capital accord, though it will be revised, will remain the central standard.  A win for global network governance.
  • accounting standards.  The G20 professes love for IFRS, and the explicit invocation of it at this meeting, since hardly necessary, may give some pause to those who thought that maybe the US would stick with FASB in light of the current unpleasantness.  No deadlines for global accounting standard adoption (read: US adoption of IFRS), though, as always.
  • tax havens.  Tax havens?  The G20 is obsessed with tax havens.  What is with the war on tax havens?  Why devote so much ink to them?  They didn't cause the crisis.  Perhaps the "blame the guys who aren't in the room" rule applies even to the great and good heads of state at this latest most important meeting ever (the Times: "In the end, the daylong conference ... yielded what seemed to be a more forceful and detailed blueprint for recovery than a similar gathering in 1933").

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