Third G20 Finance Ministers and Central Bank Governors meeting under the Italian Presidency
July 10th, 2021
On Friday 9 and Saturday 10 July 2021, the G20 Finance Ministers and Central Bank Governors (FMCBGs) gathered in Venice for their third official meeting under the Italian G20 Presidency. This was the first in-person Finance Track meeting since February 2020.
G20 members continued their discussions on issues related to global economy and health, and on the efforts to promote economic recovery and the transition towards greener and more sustainable economies and societies. G20 Ministers and Governors also had a very fruitful exchange of views on the support to the most vulnerable countries, international taxation matters and financial sector issues, including sustainable finance. The result of their discussions is detailed in the official Communiqué, issued at the end of the meeting.
G20 members recognised that the global outlook has further improved, mainly thanks to the roll out of vaccines and continued policy support. However, as already emerged at their last meeting in April, the recovery is uneven across and within countries, and remains exposed to downside risks. FMCBGs reaffirmed their willingness to use all available policy tools and to continue to sustain the economic recovery for as long as required, to address the adverse consequences of the pandemic, especially on the most impacted groups of the society. On the basis of the G20 Action Plan, the G20 will continue its efforts to steer the global economy toward strong, sustainable, balanced and inclusive growth.
Ministers and Governors remain determined to bring the pandemic under control in every country as soon as possible and they recognised the role of COVID-19 immunisation as a global public good. G20 FMCBGs urged the public and private sector to address the remaining gaps, including through the equitable global sharing of safe, effective and affordable vaccines, especially to developing countries.
Within this context, the G20 acknowledged the recent formation of the task force by the World Bank, World Health Organization, International Monetary Fund (IMF) and World Trade Organisation on COVID-19 vaccines, therapeutics and diagnostics for developing countries.
While working to tackle the current challenges, the G20 recognised the urgent need to be better prepared for future health threats and welcomed the Report of the G20 High Level Independent Panel on Financing Global Commons for Pandemic Preparedness and Response.
The third G20 FMCBG meeting brought to a historic agreement on a more stable and fairer international tax architecture. Ministers and Governors endorsed the key components of the two pillars on the reallocation of profits of multinational enterprises and an effective global minimum tax. G20 members called on the OECD/G20 Inclusive Framework on Base Erosion and Profit Sharing to finalise the design elements within the agreed framework together with a detailed plan for the implementation of the two pillars by their next meeting in October.
Given the digital transformation’s potential to boost productivity, Ministers and Governors endorsed the G20 Menu of Policy Options on Digital Transformation and Productivity Recovery, which provides policies and good practices to make better use of the opportunities of digitalisation, and will contribute to future work on productivity.
G20 FMCBGs concurred that tackling climate change remains an urgent priority. They also agreed that, to successfully face this existential challenge, a closer international coordination on climate action is needed. Climate risks represent a concrete threat for growth and prosperity. For this reason, the G20 agreed to systematically integrate them into the G20 global risk monitoring and preparedness and into future policy discussions. FMCBGs had an in-depth exchange on the most effective policy mix to shape just transitions towards a more prosperous, sustainable and inclusive economy. This mix should include a wide set of tools, such as green investments in sustainable infrastructure and innovative technologies that promote decarbonisation and circular economy. This should also include mechanisms to support clean energy sources, such as carbon pricing where appropriate, while providing support to the poorest and most vulnerable. Supporting developing countries’ adaptation and mitigation efforts is also crucial to ensure that all countries take part to the transition. International climate finance, as well as International Financial Institutions and Multilateral Development Banks (MDBs), should play a key role on this.
Climate change also poses increasing risks to the global financial stability. In synergy with the Financial Stability Board (FSB) and with other relevant international initiatives, the G20 Sustainable Finance Working Group (SFWG) will deliver a multi-year G20 Roadmap for sustainable finance. The Roadmap will be presented to FMCBGs at their October meeting and will orient the future G20 work on climate and sustainability issues.
G20 members endorsed the G20 Policy Agenda on Infrastructure Maintenance and acknowledged that resilient, well-maintained and optimally managed systems are essential for preserving infrastructure assets over their life-cycle. G20 FMCBGs also recognised that advanced and well-functioning digital infrastructure is an important driver for the economic recovery and will continue to foster collaboration between the public and private investors to mobilize further investment in infrastructure.
The G20 will continue to support all vulnerable countries affected by the COVID-19 pandemic. Ministers and Governors supported the proposal a new IMF general allocation of Special Drawing Rights (SDRs) in an amount equivalent to USD 650 billion to help meet the long-term global need for reserve assets and urged its swift implementation by the end of August. To significantly magnify the impact of the allocation, the G20 called on the IMF to quickly present actionable options for countries to voluntarily channel a share of their allocated SDRs to help vulnerable countries finance more resilient, inclusive and sustainable economic recoveries and health-related expenditures, for example through the creation of a new trust fund. Ministers and Governors also called for contributions from all countries able to do so to reach an ambitious target in support of vulnerable countries.
FMCBGs welcomed the progress achieved under the Debt Service Suspension Initiative, which amounted to an estimated USD 4.6 bn of debt service deferred in the first half of 2021. They reiterated their commitment to implementing the Common Framework for Debt Treatment beyond the DSSI and address eligible requests. In this regard, they welcomed the establishment of the creditor committee for Chad, while looking forward to timely addressing the debt treatment country case of Ethiopia. They also stressed the importance for private creditors and other official bilateral creditors of providing debt treatment at least as favourable.
On the work of MDBs, Ministers and Governors encouraged them to continue to explore avenues to make the best use of available resources, while preserving their preferred creditor treatment and current ratings. They agreed to launch an Independent Review of MDBs’ Capital Adequacy Frameworks, to maximise their development impact. Ministers and Governors also endorse the G20 Recommendations for the Use of Policy-Based Lending to boost MDBs coordination, complementarity and effectiveness.
As part of the G20 comprehensive response to the COVID-19 crisis, G20 members remained committed to ensuring that the financial sector provides adequate support to the recovery while preserving financial stability. While recognizing that the regulatory reforms following the global financial crisis have played a key role in putting banks on a sounder footing and that, during the pandemic, they have been able to act as a cushion and not as an amplifier of the shock, they committed to addressing the remaining gaps in the regulation framework, while avoiding unintended effects. Ministers and Governors also committed to strengthening the non-bank financial intermediation sector resilience with a systemic perspective, including its interconnectedness with the banking sector and the real economy.
The G20 reaffirmed its commitment to a timely and effective implementation of the G20 Roadmap to enhance cross-border payments by relevant authorities and reiterated that no so-called “global stable-coins” should commence operation until all relevant legal, regulatory and oversight requirements are adequately addressed through appropriate design and by adhering to applicable standards.
The G20 welcomed the progress made by the Global Partnership for Financial Inclusion in advancing the 2020 Financial Inclusion Action Plan, recognising financial literacy as an essential skill for the empowerment of people, especially the most vulnerable and underserved.
Finally, each G20 member committed to making additional contributions to strengthen the Financial Action Task Force-style Regional Bodies and the Anti-Money Laundering/Countering the Financing of Terrorism frameworks of their membership.
From Thursday 8 to Sunday 11 July, a number of side events were held on the occasion of the G20 Venice FMCBG meeting. These included the Annual Conference of the Global Forum on Productivity and the G20 High-Level Tax Symposium. The Venice International Conference on Climate Change will take place on Sunday, 11 July.