The global banking lobby IIF on Thursday called on G20 leaders to act decisively and jointly at their summit next week to avert the risk of another worldwide recession.
The head of the Institute of International Finance, Charles Dallara, said the G20 summit in Mexico on Monday and Tuesday is a “potential decisive point.”
“The risk of a global recession again, for the second time in four years, is very real,” Dallara warned at a news conference in Washington.
The IIF managing director, who negotiated the private sector’s writedown of Greek debt, a crucial part of an international bailout of the eurozone country, presented the concerns in an open letter to the G20.
“Markets will be looking expectantly for evidence of a globally coordinated policy response targeted to revive growth prospects worldwide on a sustainable basis,” Dallara wrote to Mexican President Felipe Calderon, whose country holds the G20 presidency this year.
Calderon will host the leaders of the advanced and emerging-market economies, which account for 90 percent of the planet’s economic output, at the resort of Los Cabos.
The Mexico summit “is arguably the most important G20 event since the London Summit in April 2009,” Dallara wrote, referring to the meeting at which leaders agreed steps to tackle a global financial crisis and recession.
The IIF highlighted economic challenges facing “many” countries, “some lingering from the 2008-2009 crisis and exacerbated now by strains in Europe.”
The uncertainty about Europe’s future is disrupting financial markets and putting the global economy at risk, said the IIF, which represents some of the world’s biggest financial institutions. “There are worrying signs of fragmentation, including retrenchment in international banking, reductions in cross-border lending and in funding markets.”
The IIF cautioned against regulatory reforms at a time of weak market confidence.
“This is therefore an opportune moment to reflect whether there should be a pause in adding further to the aggregate of regulatory reform already in place and in train,” it said. (AFP)
