G20 rift deepens before crisis talks

More money from G20 governments will give the world economy no more than a “sugar high” if banks are not stabilised...

Written by Reuters | Horsham (england) | Published:March 14, 2009 12:07 am

More money from G20 governments will give the world economy no more than a “sugar high” if banks are not stabilised,the head of the World Bank said as financial policymakers gathered to seek ways of battling the crisis.

That struck at the heart of a rift between Washington,which is pushing for governments to spend more,and European capitals,which want the response to the crisis to now focus on rapid moves on regulation in addition to doling out public cash.

G20 finance ministers and central bankers headed for the talks in southern England on Friday and Saturday under growing pressure to resolve their differences and show progress on the road to a broader summit of world leaders.

Some progress is being made: the leaders are expected to back a call this week to double IMF resources to help emerging economies hit by a collapse in global demand for their exports and the severing of credit lines.

The meeting is also tasked with issues ranging from tax havens to banking regulation and how countries deal with the toxic assets at the heart of the crisis. “If you don’t take on the banking issue,the stimulus is just like a sugar high,” WB president Robert Zoellick said.

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