G20 set up to work on crisis prevention

G20 set up to work on crisis prevention

WASHINGTON (Reuters): Aiming to prevent a repeat of the 1997- 98 financial firestorm that swept through Asia, Russia and Latin America, officials of the richest nations agreed on Saturday to create a new forum to grapple with global economic problems.

The so-called G20 will add to an array of other forums meant to further international cooperation on economic issues, such as the Group of Seven, the Group of 10 and the Group of 24.

The G7, representing the world's wealthiest countries, gave its official blessing to the new grouping at its own meeting on Saturday.

Officials said that what made the latest forum unique was its focus on the new, globalized nature of the world economy and the risks and rewards it held for countries.

"The G20's work will focus on translating the benefits of globalization into higher incomes and better opportunities for people everywhere," said Canadian Finance Minister Paul Martin, who will serve as the group's chairman for the next two years.

The G20 will be formally launched in Berlin in early December.

The world's financial leaders have been mulling such a forum for months but finally approved it this weekend. It will take the place of previous, ad hoc groups such as the so-called G33, which has met on the sidelines of past G7 meetings.

The G20 will consist of the G7 and 11 major emerging economies plus two institutional representatives.

The 11 emerging countries are Argentina, Australia, Brazil, China, India, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey.

G7 finance ministers and central bankers wrestled over the composition of the new group and considered at one stage limiting it to a group of 18 countries that would not formally include a European Union representative or the International Monetary Fund and World Bank officials.

In the end, however, they decided to include the EU and the IMF/World Bank.

They excluded Indonesia despite the size of its economy because of concerns about political problems.