World Finance

Emerging economies want new role

The G20 says there must be a global solution to current problems

World finance chiefs are looking to increase the role of emerging nations, as part of reforms to tackle the current crisis.

Finance ministers and central bank presidents from the world's 20 major economies have been meeting at a G20 summit in Sao Paulo in Brazil.

World Bank President Robert Zoellick said countries see the need for better coordination towards economic issues.

"All of us know it's a meeting at a time of historic challenge," he said.

"The food and fuel crises of the recent years have now been supplemented by the blow of a financial crisis. Virtually no country has escaped... all countries are moving into a danger zone."

'Developing country voices'

Emerging nations want to see the G20 grouping - which includes the G7 and the BRIC countries (Brazil, Russia, India, China) plus others - enhanced and also elevated to a heads-of-state and heads-of-government level, above the present finance ministerial status.

In October Mr Zoellick said the G20 system was "too unwieldy". In Brazil, he has now said that a new grouping of nations must emerge.

"We need to modernise the multilateral system to bring in the important developing country voices such as Brazil... I think over the next two years we are going to see some real changes to the global system," he said.

Brazil and other emerging-market nations do not feel that under the current set-up they have sufficient representation within bodies like the IMF and the World Bank.

France is suggesting bringing emerging economies on board as members of the G8 club of industrialized nations.

'Real change'

Brazil's President Luiz Inacio Lula da Silva said there was acceptance the G7 group of elite nations was no longer capable of working alone.

"It is time for a pact between governments to build a new financial architecture for the world," he said.

"This is a global crisis and it demands global solutions."

He said nations must "avoid temptations to take unilateral measures," and stressed that "new universal mechanisms are needed" that have to be worked out in concert.

"The crisis gives an opportunity for real changes," he said, adding: "We cannot, we must not and don't have the right to fail."

On Friday the Bric nations had called for reform of institutions like the IMF to give more influence to developing economies.

China and the Gulf states have trillions of dollars in reserves that could help the IMF help smaller countries withstand the present turmoil.

Courtesy: Currency UK | BBC News