The Group of 20 (G20) summit, slated for April 2 in London, will be the second time since last November's Washington summit that leaders from both developed and developing countries sit together in the quest for solutions to the global financial crisis and the slowdown of the world economy.
From Washington to London, countries around the world have tried all possible means at their dfffgvbgghisposal to stem the spread of the crisis and revive a sagging global economy. Worldwide efforts have been centered on the three aspects of fiscal policy, monetary policy and international cooperation.
Fiscal policy- economic stimuli
Faced with the unprecedented crisis, many countries have unveiled economic stimulus plans whose scales range from a couple of billion U.S. dollars to Washington's staggering 787 billion dollars.
The massive U.S. stimulus package includes roughly 286 billion dollars in tax cuts, 54 billion for cash-strapped states, 311 billion in appropriations, 37.5 billion for energy infrastructure, 24.3 billion for those hit hard by the crisis and 7.8 billion for law enforcement and other programs.
Many economists believe the massive bill might cushion the impact of the crisis, but could not be a quick fix for the downward spiraling U.S. economy.
Joseph Stigliz, a Nobel Prize-winning economist at Columbia University and former chief economist at the World Bank, said the stimulus package was "probably too little, especially given that it is badly designed (and) we haven't yet fixed the mortgage problem so the financial sector is likely to continue bleeding."
In Europe, the European Commission unveiled late last year a significant economic stimulus package worth 200 billion euros (260 billion dollars), amounting to 1.5 percent of the gross domestic product (GDP) of the European Union (EU). The package includes tax reductions and public spending increases.
In addition to the EU's overall stimulus package, some European countries put forward their own economic stimulus plans. The German parliament has approved two economic stimulus packages since November -- one is worth 32 billion euros (40 billion dollars) and the other 50 billion euros (62 billion dollars), with the latter being the country's largest rescue package since World War II.
The Dutch government's package amounts to 6 billion euros (some 7.5 billion dollars), representing 1 percent of the Dutch GDP.
Britain put forward a 20-billion-pound (29 billion dollars) stimulus plan, also accounting for 1 percent of its GDP.
France announced a 26-billion-euro (35 billion dollar) stimulus plan last December, focusing on investment in infrastructure rather than directly aiding consumers.
The Italian government last November came up with a plan valued at 80 billion euros (109 billion dollars), which includes 16.6 billion euros (22.6 billion dollars) for infrastructure and 2.4 billion euros (3.2 billion dollars) for low-income families.
In Asia, Japan unveiled last December a new 23-trillion-yen (256 billion dollars) package to spur its economy, bringing the government's total stimulus spending to more than 550 billion dollars.
As emerging economies, governments of East European countries approved a series of economic stimulus plans designed to maintain financial stability, create jobs and boost economic recovery.
Elsewhere in Latin America, the Mexican government announced a 54-billion-dollar recovery plan in January, focusing on boosting public spending.
The Brazilian government set aside 100 billion reais (44 billion dollars) in credit for local businesses, and put in place a national housing program which entails building 1 million houses by 2010 to shore up the domestic construction sector and create more jobs.
The Argentine government earmarked more than 20 billion dollars for infrastructure, housing and education.
Countries in other parts of the world, developed and developing countries alike, also presented various stimulus plans to boost their economies.
Monetary policy- rate cuts
Apart from fiscal policy, governments have also made better use of monetary policy -- rate cuts being one of the most frequently used instruments -- in their bid to exert influence on economies.
At its latest policy-making meeting, the U.S. Federal Reserve held its key interest rate unchanged at a record low of between zero to 0.25 percent.
The European Central Bank (ECB) cut its key interest rate earlier this month by a half percentage point to 1.50 percent to counter the economic slowdown in the euro zone. This is the fifth time in six months for the ECB to cut rates, sending the ECB's key rate to a record low.
This came on the heels of a similar move by the Bank of England (BoE), Britain's central bank, which slashed its key rate by 0.50 percentage points to 0.5 percent, also a record low.
ECB President Jean-Claude Trichet was reportedly reluctant to follow the lead of the Fed and the BoE, fearing the broad rate cuts may trigger a crisis in the future.
Japan's central bank, the Bank of Japan, cut its key interest rate to 0.1 percent last December, shortly after China's central bank slashed the lending and deposit rates by a bigger-than-expected 1.08 percentage points.
Hungary's central bank also cut its benchmark interest rate to 10 percent from 10.5 percent last December, the third such move in about a month.
Brazil's Monetary Policy Committee (Copom) earlier this month cut the country's annual basic interest rate (Selic) by 1.5 percentage points, from 12.75 percent to a record low of 11.25 percent.
Apart from rate cuts, central banks could also adjust liquidity through open market operations.
To provide greater support to mortgage lending and housing markets, the U.S. Fed announced plans to buy up to 750 billion dollars of agency mortgage-backed securities, bringing its total purchases of these securities to 1.25 trillion dollars this year. It will also increase its purchases of debt issued or guaranteed by the nation's two mortgage giants Fannie Mae and Freddie Mac this year by up to 100 billion dollars to a total of 200 billion dollars.
The Bank of Japan has decided to raise its outright purchase of long-term government bonds to 1.8 trillion yen (18.3 billion dollars) per month from 1.4 trillion yen (14.8 billion dollars) to boost liquidity and curb a rise in long-term interest rates.
Meanwhile, in the hard-hit East Europe, the central banks of Romania, Hungary, the Czech Republic and Poland said the recent depreciation of their currencies had been exaggerated.
In a bid to inject liquidity to the financial market, the Brazilian central bank sold parts of the country's foreign exchange reserves on the domestic market.
International cooperation
As the global financial crisis worsens, governments around the world have come to realized that concerted efforts are necessary to tackle the global meltdown.
At this year's World Economic Forum Annual Meeting, British Prime Minister Gordon Brown said cooperation between major powers and global financial institutions is vital to ensure a continued flow of credit to developing and smaller countries, which are likely to be the biggest victims of the recession.
In their latest meeting in Horsham, Britain, the G20 finance ministers and central bank governors agreed to restore global growth and support lending and reforms to strengthen the global financial system.
They also pledged to strengthen international cooperation in efforts to to resolve the financial crisis.
In addition, the European Investment Bank, the European Bank for Reconstruction and Development and the World Bank have recently pledged to jointly invest 24.5 billion euros (31 billion dollars) in Central and Eastern Europe to combat the crisis. The EU leaders also agreed to double the International Monetary Fund's aid pool from the current 250 billion dollars to 500 billion dollars.
Last November's G20 Financial Summit in Washington hammered out a blueprint for the new global financial system. The coming London G20 Financial Summit is expected to work out details for realizing that goal.
There is a growing consensus that in the era of globalization, international financial cooperation is one of the most effective ways to help establish a new and effective global financial system.
(Xinhua News Agency March 27, 2009)
