BUSAN, South Korea (AP) - Finance chiefs of leading economies
tackled the thorny issue of reforming supervision of banks and
other financial institutions Saturday, the urgency of their task
sharpened by fears Hungary's debt crisis could bring on a new round
of financial turmoil.
The Group of 20 major advanced and developing economies looked
likely to put aside discord over technical details for the sake of
progress on an outline for a coordinated program of financial
reforms to be endorsed by leaders, including President Barack
Obama, in a June 26-27 meeting in Toronto.
Friday's talks focused on the need to rein in ballooning
"The majority of the member states put budgetary consolidation
as their top priority," French Finance Minister Christine Lagarde
Stocks in the United States plunged Friday after a weak jobs
report, with the Dow industrials losing 324 points.
In Europe, fears that Hungary might face a Greece-like financial
meltdown pushed the euro to below $1.20 for the first time in more
than four years.
"The mood has changed decisively in favor of encouraging those
countries facing the highest risks to accelerate their deficit
reduction plans," British Chancellor George Osborne wrote in
Saturday's edition of The Times Online.
As they began their talks Friday in the South Korean port city
of Busan, the finance ministers and central bankers showed growing
concern over the threat to the global recovery from Europe's
sovereign debt crisis. Hungary became the latest country to warn
Friday it was facing problems, following Greece, Spain and
"The recent event in Europe and volatility in the financial
market have clearly shown us the global recovery is still
fragile," said Yoon Jeung-hyun, South Korea's minister of strategy
and finance, referring to Europe's $1 trillion bailout at the
opening as the chair of the session.
"Today we are meeting at a critical time when our cooperation
is more important than ever to address significant economic risks
and firmly secure the global recovery," Yoon said.
The group were to end their talks later in the day with a
statement that is expected to express strong support for Europe's
But the agenda also includes reform of international financial
institutions and nuts-and-bolts issues on how to finance and
structure safety nets to limit damage from future crises.
This includes "the need to ensure the credibility of the
massive mechanisms needed to restore stability," Lagarde said.
Apart from controversy over whether to impose a bank levy to
fund bailouts, members are also debating a global standard for
capital reserves that financial institutions must hold as cushion
against potential loan losses.
Osborne said he still would be pushing for agreements on
tightening banking capital requirements to be concluded, to "end
But some members fear that too steep or fast an increase would
prompt banks to curb lending, cutting off funding crucial for the
"There will be a delay in implementation," said Lagarde,
noting the need for technical work on the rules.
The G-20, founded in 1999, shifted its focus to crisis
management after the 2008 collapse of U.S. investment bank Lehman
Brothers. The group meeting in Busan is drafting an agenda for a
summit meeting in Seoul in November that includes building a
"framework for strong, sustainable and balanced growth."
On Friday, World Bank experts at a conference in Busan said that
agenda must take into account the growing need to tap the strong
potential of developing economies, which are due to see 6 percent
growth this year - twice that of the advanced economies.