Page last updated at 10:25 GMT, Friday, 6 November 2009

G20 ministers meet in St Andrews

By Douglas Fraser
BBC Scotland Economy and Business Editor

St Andrews
The ministers are gathering in St Andrews for the two-day event

The world's most powerful finance ministers are gathering in St Andrews for a summit aimed at pulling the world's economy out of recession.

The G20 event will be held at Fairmont St Andrews Hotel, a golf resort just outside the ancient university town.

Co-ordinating fiscal policy will be on the agenda, as well as how to police global financial and banking systems.

Protests are planned on Friday and Saturday to call for more action to tackle unemployment and climate change.

A low key rally has been held by around 20 environmental protesters who gathered with a handful of placards.

The demonstrations will also include a "People's Summit" at St Andrews University students' association.

The two-day G20 event, which is being chaired by UK Chancellor Alistair Darling, will be attended by Timothy Geithner, the US Treasury Secretary, as well as the finance ministers of Europe's largest economies and those of China, Japan, India, and Russia.

It is vital that we ... recognise that our economies are highly inter-dependent
Alistair Darling

Officials have drawn up an agenda that includes a proposal to cut down on the high level of reserves held by governments with the biggest economies.

The idea of a central reserve held instead by the International Monetary Fund is being resisted by those with emerging economies, including Brazil.

The co-ordination of fiscal and monetary policy will attempt to avoid the creation of new imbalances between different countries, similar to the ones that led to the economic crisis last year.

That involves, for instance, pressure on the US to increase savings and on China to increase consumption.

Curb bonuses

Developing countries are also raising concerns that capital flows into their economies are resulting from relatively low interest rates in the most developed economies, leading to over-valued currencies.

The previous finance ministers meeting - which took place in London in September, followed by heads of government in Pittsburgh - set out plans to curb excessive banker bonuses, which were seen as creating incentives for reckless risk-taking.

There is pressure at the St Andrews meeting, particularly from the French government, to ensure others are implementing that agreement on common standards.

And on Saturday morning, there is to be discussion of the transfers of funds from richer, more developed countries that will be necessary to help developing nations adapt to their climate change requirements.

In a letter to fellow summiteers ahead of their gathering, Mr Darling set out his agenda: "As the process of recovery continues, it is vital that we co-operate more effectively in managing the world economy, recognising that our economies are highly inter-dependent."



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