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April 2, 2009    

G20 leaders thrashing out $1tn deal to tackle world recession

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by Peter Charalambous
G20 leaders thrashing out $1tn deal to tackle world recession

The G20 has reached a decision in dealing with the financial turmoil, as British Prime Minister Gordon Brown has announced leaders are working on a $1 trillion deal as a global solution to a worldwide problem.

It has created a direction that world leaders can focus on and officials are hoping that the International Monetary Fund (IMF) will treble the amount of emergency funding available from $250bn to at least $750bn.

Thus far, both Japan and the European Union have sanctioned $100bn to the cause.

At the core of the discussion is the belief that the emerging markets are responsible for 70 percent of world growth and that kick-starting the poorer economies is the most efficient way of boosting the world economy.

As a result, leaders are hoping to increase the special drawing rights that the IMF can make available to national governments.

Outside of creating a unanimous direction thus far, it seems as though there are splits within the main ideals of the G20, with the UK and the US sanctioning stimulus packages, whilst Germany and France having altogether different goals.

Similarly, both Russia and China have made different propositions regarding currencies with the former espousing the idea of an international reserve currency.

Russia stated prior to the G20 that strengthening regional currencies would be important given the current financial crisis.

It seems as though the G20 Financial Summit is primarily interested in promoting economic growth rather than finally analysing and overhauling the financial system.

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