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Leading commentators call for overhaul of G20 process

Thursday 10 June 2010 - by Nicola York

The chair of the European Committee on the Financial Crisis and the chairman of the Alternative Investment Management Association have both criticised the G20 process, saying it needs to be overhauled.

Speaking to GFS this month, Wolf Klinz MEP and Cris chair said he is concerned that the G20 commitments will not be fulfilled due to the process they have to go through.

He said: “I’m really afraid that we will miss the objective. I personally have the feeling that the commitment to really implement the G20 recommendations that have been published following the last meeting is no longer as strong as we thought it would be. I think at the end of the day, we will see that we will not have the same degree of implementation in all those members of the G20 and this is very disappointing.”

Klinz says that at present the G20 has no binding power but that it should do in future. It should also have a secretariat – perhaps the International Monetary Fund - in his view.

He says: “As the legislative parties have started working on various issues, regulating hedge funds, derivatives, CRAs or dealing with the question of too big or too interconnected to fail, they realise that the pressures for ministry are different, so somebody feels that he has to give way here or there. And all of us realise that the outcome of the final programme is no longer the same. I think we have to give it more power otherwise it will not do the trick.”



Aima chairman Todd Groome believes that the International Organization of Securities Commissions and the Basel Committee should play a greater role in the global regulatory process.

He says: “G20 sets the political direction and that political direction should be absolutely educated, not just by heads of state but by finance ministers, the Tim Geithners, the George Osbornes, they are driving a political directional general level.

“Then you have to delegate quite frankly to IOSCO, for hedge funds and markets and securities firms, and you have to delegate to Basel for banks and at that table you have the people who are responsible for the day to day detail at IOSCO and at Basel.

“I think that if global consistency and coordination are ever to be realised to any degree, we need to give more responsibility to IOSCO.

“The people round this table are truly regulators - not bureaucrats, not politicians - who are on the ground regulating institutions in major markets
“If you get that group together then you get good principles, then you move it to a national level and they set in place more detailed rules of what they want.”


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