G20 agree on historic financial package
$1.1 trillion deal to fight crisis
World leaders yesterday clinched a $1.1 trillion deal to combat the worst economic crisis since the Great Depression, and tightened the rules to stop it happening again.
At a G20 summit, they agreed to publish a blacklist of tax havens that could lead to sanctions, and for the first time to impose oversight on large hedge funds and credit rating agencies.
"Today's agreement begins to crack down on the cowboys in financial markets that have brought global markets undone, with real impact on jobs everywhere," Australian Prime Minister Kevin Rudd said.
British Prime Minister Gordon Brown, the summit host, declared: "This is the day that the world came together, to fight back against the global recession. Not with words, but a plan for global recovery and for reform, and with a clear timetable".
Markets, desperate for good news when the global economy is shrinking for the first time since World War II, reacted positively to the imposing headline numbers.
Brown said governments had committed $5 trillion to public stimulus of the economy this year and next, before even taking into account the extra commitments from the summit in London.
He did not say how that squared with the stimulus estimate he gave just a day earlier - of about half that amount.
"It seems like they're throwing out huge numbers on stimulus, but it's unclear whether this is just double counting things that have already been spent, or whether it's actually gotten new commitments, and follow-up is going to be key," said Steven Schrage, from the Centre for Strategic and International Studies in Washington.
Either way, the index of top European shares was up five per cent after Japan's Nikkei gained 4.4 per cent. On Wall Street, the Nasdaq was up 3.5 per cent and the Dow Jones 3.3 per cent. The price of oil topped $52.
"The IMF funding is more than expected, and in so far as that means there is a larger pot of money available to bail out troubled economies that is good news. But these troublespots, particularly in Eastern Europe, are still there and this will not make them go away overnight," said Nigel Rendall, emerging market strategist at Royal Bank of Canada.