Introduction sectionFirst G20 Finance and Central Bank Deputies meeting
First G20 Finance and Central Bank Deputies meeting
On 25-26, January 2021, G20 Finance and central banks deputies held their first meeting to discuss and approve the work plan for 2021.
Given the Covid-19 pandemic’s ripple effects on global economic activities, the recovery was at the centre of the agenda. The meeting started with a discussion on digital transformation, inspired by a keynote speech from Erik Brynjolfsson, Jerry Yang and Akiko Yamazaki Professor at Stanford and Director of the Stanford Digital Economy Lab. As digitalisation should become an opportunity for all, global Leaders will have to address the social and economic challenges, which may emerge in more digitalised and innovative societies.
Deputies also discussed the priorities and work programmes of the G20 Finance Track Working Groups.
The Framework Working Group (the FWG had its first meeting on 12 January 2021), will focus on the policy challenges around immediate policy support for the recovery, while addressing long-standing challenges such as climate change and inequality. It will look at policy options to provide emergency support, while enhancing productivity through digital transformation. In 2021, the FWG will enhance its global risks monitoring efforts, also with the aim of being better prepared for weathering future risks.
The International Financial Architecture Working Group (the IFA WG, started its activities on 17 December 2020) will continue monitoring the Debt Service Suspension Initiative (DSSI), a temporary debt moratorium, and discussing its potential further extension to free up short-term liquidity for the most vulnerable countries. It will also monitor the Common Framework for debt treatments beyond the DSSI, which will help these countries renegotiate their debt obligations to make them sustainable, and look at initiatives to improve debt transparency for both creditor and debtor countries. The IFA WG will also assess the medium-term financing needs of low-income countries and explore innovative ways to address them, while enhancing coordination and synergies among development partners. IFA WG members will also focus their attention on strengthening further financial resilience through better management of the risks stemming from excessive capital flows’ volatility, by developing domestic capital markets, and through a strong and effective Global Financial Safety Net (GFSN).
As the Covid-19 crisis is having disruptive effects on several infrastructure networks (transportation, energy, water), as well as on social infrastructures (healthcare, education), the Infrastructure Working Group (the IWG already met on 14 December 2020) will continue its work to promote quality infrastructure investments. Under the Italian G20 Presidency, the IWG will work on defining this transformative infrastructure-related response around four pillars: resilience and maintenance; digital infrastructure; sustainable infrastructure and social inclusion.
The Finance and Central Bank Deputies meeting continued on Tuesday 26 January with a symposium on finance and digitalization, opened by Markus K. Brunnermeier, Edwards S. Sanford Professor of Economics and Director of the Bendheim Center for Finance at Princeton University.
The G20 Italian Presidency presented the priorities and work programme with respect to financial regulation and financial inclusion, international taxation, the financing of pandemic preparedness, and sustainable finance. The programme received full support by the Membership.
As the pandemic will continue to shape global economic developments well into 2021, the financial sector, including non-bank finance will have to learn from the crisis, and decide whether the regulatory framework may need specific adjustments. Another priority for the Italian Presidency, in the financial sector area, is the timely implementation of the Roadmap on enhancing cross-border payments endorsed under the Saudi presidency. A third, especially important, objective is the re-establishment of the Sustainable Finance Study Group, which will contribute to understanding how the financial sector can help achieve a green transition and align with the sustainable development goals.
Under the Italian G20 presidency, the Global Partnership for Financial Inclusion will work to design policies and action plans to enhance the digital financial skills, develop responsible and inclusive digital financial services and protect final customers. The GPFI will also continue its work to reduce the costs of remittances – still a crucial source of financing in many countries.
On international taxation, the G20 will continue to address the tax challenges arising from digitalization in the economy. It will strive to ensure that profits are taxed where the value is generated, with a view to reaching a global and consensus-based solution on this issue. In terms of tax transparency, the Italian presidency will focus on the importance of information-sharing between jurisdictions to combat tax evasion and avoidance, on promoting tax certainty and effective dispute resolution, and on enhancing developing countries’ capacity in tax policy and tax administration. Sustainability will be crucial in this area too: the 2021 G20 High Level Tax Symposium will revolve around the role that tax policy can play to support the transition to a low-carbon global economy, promote green technologies and investments, and encourage the use of more efficient and less polluting energy sources.
The Working Group meetings scheduled in 2021 will further discuss and examine the above-mentioned issues. Their work will feed into the four G20 Finance Ministers’ and Central Bank Governors’ meetings and, eventually, to the agenda of the Leaders’ Summit to be held on 30-31 October 2021 in Rome.