Obama to work on G20 growth strategy

14 Mar 2009, 11:09 am   -   Source: AAP
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US president Barack Obama is to work on a strategy for the Group of 20 to boost exports and improve financial rules aimed at fuelling economic recovery.

US president Barack Obama is to work on a strategy for the Group of 20 to boost exports and improve financial rules aimed at fuelling economic recovery, his economic aide, Lawrence Summers, said on Friday.

"Stronger exports are one sound foundation for sustainable expansion," he said at a Washington forum.

"That is why along with strengthening financial regulation, the president will be working on the global growth strategy at the G20," he said as finance chiefs from the G20's developing and industrialised nations met for talks in London.

They were preparing for the much-awaited summit of G20 leaders in London on April 2, which Obama will attend.

Summers said "priorities" in Obama's G20 strategy would include "spurring demand around the world and assuring the adequacy of funding for emerging markets.

"These are issues both for global recovery - at a time when 2009 is likely to the first year of negative global growth since the Second World War - and for a healthy, less debt-dependent US expansion," he said.

Financial turmoil arising from a US home mortgage meltdown has resulted in unprecedented actions by governments, including multibillion-dollar state bailouts of troubled mega private banks and other institutions.

Summers said Obama was "eager to take up" the issue of overhauling global financial regulations at the summit.

"While the discussions can get pretty technical quickly, some things should be clear," Summers said, amid a split between Europe and the United States on immediate strategies to calm financial turmoil and restore global growth.

While the United States, the world's biggest economy, wants a coordinated international stimulus to jolt economies from recession, most of Europe seemed suspicious of such a move and favours tightening regulation of financial markets and institutions.

Elaborating on the need for clarity on the debate for financial oversight, Summers said regulatory agencies "should never be placed in competition for the privilege of regulating particularly financial institutions".

Globally, he said, the United States "must lead a levelling-up of regulatory standards, not as has happened all too often in the recent past, trying to win a race to the bottom."

He said in addition: "No substantially interconnected institution or market on which the system depends should be free from rigorous public scrutiny."

Required levels of capital and liquidity must also be set with a view toward "protecting the system, even in very difficult times", he said.

Summers also wanted "far more vigorous and serious efforts to discourage improper risk taking through transparency and accountability for errors."

Summers and other senior Obama administration officials have recently said leading nations must try to jumpstart global recovery by pumping more money into their economies.

But that has not been welcomed in Europe, where many leaders do not want more spending amid big budget deficits.

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