“Balanced” growth also implies to facilitate the catching up of developing countries (and the taking off of the poorest). Drawing the lessons from the crisis, growth cannot be strong without being sustainable and cannot be sustainable if it is not balanced. The so-called “Framework for Strong, Sustainable and Balanced Growth” is the key mechanism by which G20 countries work together to achieve these objectives. With support from the IMF, G20 countries are going through a mutual assessment process by sharing their policy frameworks, programs and projections and assessing their consistency with the common objectives. This process will lead the G20 to recommend policy options to its members. Policy options obviously depend on national circumstances. Countries facing serious fiscal challenges need in particular to accelerate the pace of fiscal consolidation, while countries that have the capacity should expand domestic sources of growth and help cushion a decline in demand from other countries. Reforms of social safety nets will be essential in both cases and structural reforms of the product and labor markets will be key to foster stronger growth in the medium and long run. Policy options may also entail exchange rate adjustments consistent with smooth rebalancing. In search of global financial safety nets There is another side to rebalancing where finance matters. Starting with the Asian crisis of 1997–1998 and up until the global shortage of liquidity that took place in 2008, many emerging countries have experienced sudden stops of capital inflows on a recurrent basis.
Christian Noyer: G20 roadmap – how finance can help rebalance the world economy Introductory speech by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, at the Paris Europlace Financial Forum, Paris, 6 July 2010. *  *  *  Before I start let me thank the organizers for inviting me to this conference: they have managed to put together an outstanding program and it is a great pleasure for me to exchange views with the other participants in this round table. I was asked to introduce the discussion on “G20 Roadmap: How Finance Can Help Rebalance the World Economy”. The title of this session contains some of the most important concepts on the current policy agenda: “finance”, “rebalancing the world economy” and “the G20 Roadmap”. Let me take them in turn. “Finance”, first. Since 2008, the world is going through the deepest financial crisis since the second World War, and hence never before has the word finance been so crucial in the policy agenda. This financial crisis has had very high real costs: real output, industrial production, trade flows, to name just a few key variables, have contracted markedly during the crisis. In addition, the fiscal positions and the public debt of many countries have also deteriorated markedly in the past two years. Yet, it is important to recall that these real and fiscal problems largely stem from the financial issues that plagued our economies in the past decade.