The International Financial System in Distress

The economic transformation needed to recouple economic growth with social prosperity and environmental sustainability will require a significant amount of financial resources. These financial needs come against the background of the Covid-19 pandemic, which has triggered massive fiscal spending for supporting the economy and improving public health. Central banks have created very large amounts of liquidity. Debt levels have risen strongly. Especially in low- and middle-income countries, this presents a serious problem, which the global community has to address systematically and urgently in order to safeguard monetary and financial stability. There are also longer-term challenges to financial stability and the international financial system. Among them are the emergence of digital currencies – a largely unregulated field – and the increasing internationalization of state-owned enterprises. Moreover, bank management and central bank strategies are challenged by the need to contribute to ESG global objectives. The G20 is a major forum for addressing issues in international finance, and this panel will make recommendations to G20 policy-makers.

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