G20 set to delay banking reform

The eurozone debt crisis has cast doubts over durability of a fragile global economic recovery.

Finance ministers from the world8217;s leading nations sought to narrow differences on key banking reforms before wrapping up a two-day meeting aimed at safeguarding a fragile recovery in the global economy.

The G20 ministers meeting in South Korea8217;s southern port city,Busan are engaged in a delicate balancing act of nursing a fragile global recovery from the 2008-09 crisis while reining in massive deficits in some member nations.

Even though the issue of providing new capital and liquidity standards for banks has been divisive,signs have emerged that the group could be edging towards consensus in allowing more time for implementation.

8220;I think that can be worked out over time. There could be a compromise over that,8221; Canadian Finance Minister Jim Flaherty told reporters. The International Monetary Fund is expected to present a revised draft proposal on a banking tax levy at the next G-20 meeting,scheduled at Toronto on June 26-27.

Many argue more time is needed to assess the implications of tighter banking requirements and how any global standard can be reconciled with an array of different national regulatory plans and tax regimes.

8220;I hope we will reach a consensus on principles. But as for the timing,we will see,8221; French economy minister Christine Lagarde said before adding that it was 8220;an open secret8221; that Canada and Australia would oppose rushing into a bank tax.

The proposed global tax is supported by European powers and the United States but resisted by Canada and Australia and some developing countries,who argue that they should not have to pay to clean a mess they did not create.

Story continues below this ad

However,one official who did not wish to be named said such opposition was 8220;short-sighted8221;. 8220;The argument that 8216;we didn8217;t have a crisis,so we don8217;t have to do anything8217; is very short-sighted. You didn8217;t but you might next time,8221; the official said.

8220;In the same way traffic laws are designed to guarantee safety and there are enforcement mechanisms and still there are traffic accidents. You can8217;t design a system where there are no accidents8221;,he added.

The eurozone debt crisis has cast doubts over the durability of a fragile global economic recovery,with ministers at the Busan meeting working towards preparing a path towards sustainable and balanced growth.

Markets remain ruffled despite the European Union8217;s move to craft a 750-billion-euro 913 billion dollar rescue plan and a European Central Bank effort to buy the bonds of troubled countries such as Greece.