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A new financial order

(China Daily)
Updated: 2009-03-23 07:43

The just-concluded G20 meeting of finance ministers and central bank chiefs shows that emerging economies are playing an increasingly important role in the global economy.

At the G20 meeting in London last weekend, Brazil, Russia, India and China, the so-called BRIC, issued a joint communiqu, calling for reform of the International Monetary Fund (IMF), raising the voice and status of developing countries in the international financial system.

Related readings:  What role will China play in the G20 summit?  Summit aims (III): Putting the world economy on track  Summit aims (II): Strengthening the global economic system  Summit aims (I): Taking all necessary action to fight crisis

Representatives of the four nations proposed to increase the resources of the IMF and raise the agency's membership dues. They called for a timetable and blueprint for reform of international financial bodies including the IMF and the World Bank (WB). Changes in the global economy should be fully reflected in the process, and the role and status of emerging nations ensured, they said.

The G20 meeting is a lower-level gathering prior to the upcoming G20 summit aimed at working out concerted measures to deal with the global financial crisis. Whether or not the communiqu will be approved by the summit is unpredictable, as the IMF and WB, as the world's two leading financial bodies, have long been dominated by the US and Europe.

The G20 summit is equivalent to diplomatic warfare with the US-led developed countries on one side and the emerging economies and other developing countries on the other side. The upcoming London summit is expected to result in a new international financial system, not only to deal with the ongoing financial crisis, but also to reflect the status of emerging economies and developing countries in the global financial system.

To put an end to the traditional dividing up of the WB and IMF leadership between Europe and the US, the communiqu said, "The heads of these international financial institutions should be appointed through an open, merit-based selection processes."

Chinese Minister of Finance Xie Xuren called for an equitable, fair, tolerant and orderly international financial system adapted to the new reality. This new global financial arrangement would mean that interests would be redistributed among developed and developing nations, so any consultations on this topic will be long and drawn out.

At its meeting last April, the IMF board approved a measure to increase the voting power of developing countries while decreasing that of developed nations. This consensus was reached after several rounds of arduous talks.