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Business

Opinion: Landmark Finance Summit Sets New World Order

At the emergency summit in Washington, G20 leaders agreed to tighten regulations and increase transparency of the financial markets. But that's not the only reason the meeting was a success, says DW's Michael Knigge.

Opinion

Expectations ahead of the economic summit differed greatly. Some were hoping for the big bang, the rebirth of the global financial order. Others were hoping to get back to their daily business quickly after a nice sounding but meaningless appeal from the G20 states.

But the G20 summit in Washington was a disappointment to both extreme positions -- and that's exactly why it was a success. US President George W. Bush was right when he said before the meeting that the crisis didn't start over night and couldn't be resolved in just one day.

Michael Knigge

Michael Knigge

But the Europeans, and particularly the Germans, were also right to insist on revamping the global financial system as quickly and as concretely as possible.

Concrete plan with a deadline

The result of the comprehensive final report is clear: The joint paper not only pledges the establishment of new global regulatory bodies, better monitoring of the rating agencies and the regulation of high-risk hedge funds.

It also calls for more transparency and predictability in the global financial and economic order. The international financial organizations are to be reformed.

Let's be honest: Just a few months ago, who'd have thought that the US, of all countries, would host a conference with this result? Probably no one.

The fact that not only a joint action plan was laid out but also a clear timeframe for implementation and an appointment for a follow-up summit gives the process teeth.

Blueprint for global crisis management

In addition to the concrete results it brought, there's another reason why the summit was a big success: For the first time, heads-of-state from the world's most important industrialized countries sat at the same table with their counterparts from emerging nations in order to resolve a global crisis.

And this G20 meeting won't just be a one-day thing, but will serve as a blueprint for future global crisis management.

All countries -- even the western industrialized nations -- unanimously support a larger role for emerging countries like India, China and Brazil in international financial bodies. That is precisely what Bush meant when he said that the financial structures have to be adapted to the realities of the 21st century.

With this G20 summit, a new order of global power relations has officially been ushered in. A return to the order that existed before the finance crisis now seems unthinkable.

Michael Knigge is the head of DW-WORLD's German service. (kjb)

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