Do you think that the political willingness affirmed by the G20 members has been successfully transformed into efficient financial reforms?
The G20 has been continuously discussing the full and internationally consistent implementation of the reforms that the G20 has committed to date. Such emphasis on implementation is one of what differentiates the G20 from other international forums. To ensure the implementation of key international standards and G20 commitments across the globe, the G20 utilizes the peer review assessments conducted by the FSB, FATF, OECD Global Forum and other international organizations to monitor these implementations. The results are then carefully reviewed at the G20 meetings.
What are the greatest achievements of the recent decisions made in financial sector reforms?
The greatest achievement of financial regulatory reform at the Seoul Summit is probably the delivery of core elements of the new financial regulatory framework, such as the Basel III framework and the Policy Recommendations, to address the too-big-to-fail problem. The decisions made at the Seoul Summit is special in that Leaders did not stop at merely establishing recommendations and standards but went on to set concrete timelines and framework to implement the agreed recommendations/standards, and outlined what further work needs to be done. Other significant progress includes the agreement to work further on macro-prudential policy framework; to better reflect the perspective of emerging market economies in financial regulatory reforms; to strengthen regulation and oversight of shadow banking and commodity derivatives markets; to improve market integrity; and to enhance consumer protection.
What are some G20 decisions that are less convincing?
The G20 has been pursuing intensive reforms across the financial sector and produced tangible outcomes in nearly all of its undertakings. It is therefore difficult to point out areas where there have been insufficient achievements. But to point out where there was room for further achievements, I would say that there could have been more progress in the macro-prudential policy framework including surveillance of the financial sector. There was relatively less outcomes in this area partly because other critical issues such as Basel III and the too-big-to-fail problem preoccupied the G20 agenda this year. To make further progress on this issue, the Leaders in Seoul called on the FSB, IMF, and BIS to do further work on the macro-prudential policy framework in order to deal with systemic risks in the financial sector in a comprehensive manner and on an ongoing basis.
Do you agree with the project of a tax on banks or on banking transactions?
Tax on banks or on banking transactions were discussed at the G20 based on the recognition that the financial sector should make fair and substantial contributions to share the cost of the failures in the financial sector. But contribution by the financial sector is an issue where a single approach cannot be applied to every country, since there are huge differences in the specific financial landscape of each country. Therefore, a ‘one-size-fits-all’ approach would lead to greater negative effects. This is why the Leaders agreed only on the broad principles in Toronto. In fact, some countries are already taking concrete steps to introduce bank levies. We expect that each country will adopt a specific approach that best suits its own situation.
Are the Asian countries going to implement Basel III? What about Korea?
We expect the G20 members to fully implement the new standards within the agreed timeframe. Other Asian countries will eventually follow suit, but since they are all at different stages of financial development, the speed and timing of implementation will inevitably differ across countries. In this regard, the G20 has developed a plan to address the issue of regulatory and supervisory capacity building of developing countries as a core agenda item for the upcoming G20 summit. At the Seoul Summit, the G20 called on the FSB and other international organizations to conduct an in-depth research on the issue of financial stability specifically pertaining to emerging market economies, including with regards to capacity building.
What do you think about new measures on currencies?
We have made some significant steps forward on exchange rates and global imbalance. The most important achievement is that Leaders agreed on a specific work schedule to address these issues. Leaders agreed to develop an indicative guideline by the first half of 2011, and to conduct the first mutual assessment under the French presidency next year. By agreeing on these specific deadlines, the G20 has clearly demonstrated that it is actually capable of moving forward to come up with concrete measures to address these currency issues.
Short biographic note : Yongbeom Kim
Yongbeom Kim is Director General of Global Financial Architecture Bureau in the Presidential Committee for the G20 Seoul Summit. He is also co-chair of the G20 Financial Inclusion Experts Group. From 2000 to 2005, he was senior financial economist at the World Bank. He began his public service in Korea's Ministry of Finance where he served at Treasury, Capital Markets, and Financial Policy Divisions. He holds a Ph.D in economics from George Washington University on a Fullbright Scholarship.
