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WASHINGTON: Ahead of the G20 summit next month, financial leaders from member countries of the group held a conference in Washington this week to discuss key economic issues and risk factors affecting the international monetary system and the stability of the world. the world economy.
Food security, rising energy prices, high inflation, cross-border payment systems, financial risks, cryptocurrency and cyber-resilience were among the main topics discussed by finance ministers and governors central banks during the two-day event on October 12-13.
Indonesian Finance Minister Sri Mulyani Indrawati, whose country currently holds the G20 presidency, told the conference that recent monetary policy tightening and interest rate hikes by advanced and emerging countries have led to economic risks around the world.
She added that the global economic situation has become more difficult as nations grapple with issues such as rising inflation, food and energy insecurity, low growth and geopolitical fragmentation.
“It is no exaggeration to say that the world is in danger,” she said.
Indrawati blamed the COVID-19 pandemic and the war in Ukraine for having “reshaped the global energy market” which led to “energy security problems”, as well as supply shortages and price hikes. which affected most countries.
G20 financial leaders reviewed key economic reports to be discussed at the main G20 summit scheduled for Bali, Indonesia on November 15-16. They also discussed climate-related economic risks and the effects of the pandemic. on the financial sector.
One of the main objectives of the conference was to discuss a report and recommendations, released in July, following an independent review of multilateral development banks’ capital adequacy frameworks launched last year. by G20 financial leaders.
MDBs are international and regional monetary institutions, such as the World Bank and the Islamic Development Bank, created by sovereign states to provide loans and grants to developing and less wealthy countries. Capital adequacy frameworks are designed to strengthen the financial stability of these institutions and promote creative ways to ensure the availability of capital to help developing countries promote economic and social growth and stability.
Delegates in Washington discussed whether there is currently an overreliance on loans and assistance from these banks.
“We believe that the capital adequacy framework is the right solution that can help optimize the balance sheet of MDBs, whether you are talking about risk appetite (or) creative financing,” Indrawati said.
She and other financial leaders underscored their support for the MDBs’ commitment to global development, especially in developing countries that face heightened financial risks, especially during global crises such as the pandemic.
Delegates highlighted the war in Ukraine as one of the main reasons for the increasing levels of food insecurity and a nutrition crisis affecting many developing countries. Indrawati said the conflict has disrupted supply chains around the world and caused energy prices to rise sharply.
G20 members include the world’s largest developed and emerging economies. Together, they represent more than 80% of the world’s gross domestic product, 75% of international trade and 60% of the world’s population.
The group members are: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, United Kingdom and United States. . The EU and Spain participate as permanent guests.
Indonesia is the largest Muslim country in the world, with a population of over 230 million, and considered a key global and regional economic power.