G-20 Leaders Promise Measures to Fight Global Recession


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This is the VOA Special English Economics Report.

Leaders of the world's largest rich and developing economies met Thursday in London. The Group of Twenty agreed to an additional trillion dollars for the International Monetary Fund and other lenders to strengthen the world economy and trade. President Obama says the G-20 summit will be a "turning point" in seeking global economic recovery.

The leaders promised to keep closer watch over banks, hedge funds, credit rating agencies and executive pay. They also agreed to act against countries that provide tax shelters for the wealthy. And they agreed to form a supervisory group to warn of problems in the world financial system.

The G-20 is nineteen countries and the European Union. Members represent about ninety percent of world economic activity and eighty percent of trade.

Finance ministers and central bankers formed the group ten years ago to give more attention to developing nations. Leaders met last November for the first time. They plan to meet again in September.

Protesters hold banners showing anger over economic situation
Protesters in London angry over the economic situation
Developing economies like China, India and Brazil want greater influence over international financial policy and groups like the I.M.F. Western countries now see developing nations as important partners in the effort to get the world economy growing again.

The currency most commonly used in foreign trade is the dollar. But last week, the governor of the Chinese central bank suggested that the dollar be replaced as the world's leading reserve currency. Zhou Xiaochuan called for a new currency disconnected from individual nations -- such as using what are called Special Drawing Rights.

The International Monetary Fund created the Special Drawing Right, or S.D.R., forty years ago. The value is based on several major currencies. Today the I.M.F. and some other international organizations mainly use it as an accounting tool.

Last week a United Nations group of experts also urged a new global reserve system -- an expanded version of Special Drawing Rights.

At the G-20 meeting, Russian President Dmitri Medvedev called for a study of a new reserve currency. He said it would be wise to support the creation of strong regional currencies and use them as the basis, possibly also using gold.

Few experts see a threat to the dollar, at least for now.

And that's the VOA Special English Economics Report, written by Mario Ritter. For more on the London summit, go to en8848.com. I'm Steve Ember.