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G-20 in London

September 5, 2009

The debate over bankers' bonuses is set to dominate Saturday's meeting of the G-20 countries in London, with France and Germany increasing pressure on Britain and the USA to impose a bonus cap.

Money changing hands
Bonuses for bankers have been a hot topic during the crisisImage: picture-alliance/ dpa

Finance ministers and central bank officials from the world's leading economic powers are to discuss the best way of guiding the world out of its current financial crisis on Saturday with different countries suggesting various strategies.

France and Germany, along with five other countries, are united in calling for a stringent crackdown on bankers' bonuses, but so far British support for such a measure has been cautious. Britain and the USA are keen to protect their powerful banking communities in London and New York, and have so far opposed any drastic sweeping measures that may provoke the banks.

Britain warns against German complacency

German Finance Minister Peer Steinbrueck is also keen to discuss when and how countries will withdraw state stimulus packages. But this proposal has elicited only a lukewarm response from other countries, with French Finance Minister Christine Lagarde saying that while she would welcome discussing an exit strategy, the timing for an end to the financial crisis was something that "God only knows".

British finnace minister Alistair Darling
Darling warns of complacency about the financial crisis.Image: AP

Steinbrueck's British counterpart Alistair Darling warned against complacency and over-optimism in the week leading up to the meeting in London, after positive economic indicators in Germany and France suggested that the world had weathered the worst of the global financial crisis. In an interview with Britain's newspaper The Independent, Darling expressed fears that optimism may lead to some countries stopping their fiscal stimulus programs prematurely.

Steinbrueck's international transaction tax

According to Saturday's edition of the German Berliner Zeitung newspaper, Steinbrueck also intends to use the G-20 meeting to propose a new international transaction tax on the world's financial markets. This, he hopes, will precipitate what he calls a fair distribution of the massive burdens of the financial crisis.

Steinbrueck's tax, inspired by a proposal made in 1970 by American economist James Tobin to impose a tax on currency speculation, would be levied on all financial products in all the markets in the world. The reaction of other members of the G-20 group to this idea is unclear as yet.

The main purpose of the short weekend meeting is to agree an agenda for the major G-20 summit in Pittsburgh at the end of September.


Editor: Nick Amies