26 August 2018: UPSC Exam PIB Summary & Analysis

Group of Twenty

  • It is an international forum for the governments and central bank governors from 20 major economies.
  • The members include 19 individual countries and EU represented by European commission and its central bank.
  • The G-20 was founded in 1999 with the aim of studying, reviewing, and promoting high-level discussion of policy issues pertaining to the promotion of international financial stability.
  • It seeks to address issues that go beyond the responsibilities of any one organization. Collectively, the G-20 economies account for around 85% of the Gross World Product (GWP) {It is the combined gross national product of all the countries in the world.}
  • Its Nuances were enhanced as a response both to the financial crisis of 2007–2010 and to a growing recognition that key emerging countries were not adequately included in the core of global economic discussion and governance. After the 2008 debut summit in Washington, D.C., G-20 leaders met twice a year in London and Pittsburgh in 2009, Toronto and Seoul in 2010
  • The G20 is supported by international organisations, including the Financial Stability Board, the International Labour Organisation, the International Monetary Fund, the Organisation for Economic Co-operation and Development, the United Nations, the World Bank and the World Trade Organization.

Notable points:

  • The G20 operates as a forum and not as an organisation. Therefore, it does not have any permanent secretariat or management and administrative structure.
  • One of the G20 countries is selected to hold the Chair in rotation, also known as ‘G20 presidency’. The presidency establishes a temporary secretariat for the duration it holds the Chair. The secretariat coordinates all work and organizes G20 meetings.
  • The immediate past, present and next Chair constitutes a ‘troika’ and ensures continuity in the G20 work. Australia (2014), Turkey (2015). Turkey handed over the Chair to China in 2016. After China, Germany held it in 2017.
  • For selecting presidency, a system has been in place since 2010, when South Korea held the Chair. Under it, 19 countries have been categorised into five regional groupings of a maximum of four nations each.

Advantages

  • It provides forum for Developing countries in deliberation on important matters of international importance 
  • First met in 2009 – Was to play a pivotal role in stemming economic and financial crisis of Recession – It set a framework for preventing  future financial crises, while securing sustainable and balanced global, restraining protectionism
  • Central bank governors and finance ministers work on coordinated action to eliminate terrorist financing, Black money issues
  • Issues of Tax Haven – Members agreed to share tax information – Agreed to adopt OCEDs BEPS measures to stop transferring of profit by MNCs without paying taxes
  • Since 2010, G-20 agenda widened to issues like Agriculture, Food security, Trade, Investment, Employment, Taxation, Anti corruption, energy, climate, SME
  • G 20 is transforming from flexible and informal institution into Group with Working parties, Expert group on different subjects

Drawbacks

  • The G-20’s transparency and accountability have been questioned by critics, who call attention to the absence of a formal charter and the fact that the most important G-20 meetings are closed-door
  • In June 2010, Singapore’s representative to the United Nations warned the G-20 that its decisions would affect “all countries, big and small”, and asserted that prominent non-G-20 members should be included in financial reform discussions
  • Norwegian Foreign Minister Jonas GahrStøre called the G-20 “one of the greatest setbacks since World War II.” Although Norway is a major developed economy and the seventh-largest contributor to UN international development programs, it is not a member of the EU, and thus is not represented in the G-20 even indirectly.
  • Currency volatilities could continue to pose concerns as emerging economies experience slowdown.

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