On the surface, the G20 Finance Minister Meetings appeared to do very little substantive work last weekend. To no one's surprise the leaders pledged to keep emergency support for their economies in place, but couldn't come to a consensus on how to curb excessive banker bonuses and make banks safer. They charged the Financial Stability Board to study this regulatory issue and come back 16 days to report at the G20 leaders' summit in Pittsburgh.
On the exit strategies, this would be a case of making a major decision by not acting. "Our unprecedented, decisive and concerted policy action has helped to arrest the decline and boost global demand. Financial markets are stabilizing and the global economy is improving, but we remain cautious about the outlook for growth and jobs, and are particularly concerned about the impact on many low income countries. We will continue to implement decisively our necessary financial support measures and expansionary monetary and fiscal policies, consistent with price stability and long-term fiscal sustainability, until recovery is secure."
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There will be a bifurcation on exit strategies. Globally, governments will keep credit and fiscal support programs in place until the recovery is secure. Globally, central banks will keep credit and monetary support programs in place until the recovery is secure. Obviously, this comes down to how each will interpret this security and the time frame in which they will act.