The G20 Seoul Summit drew to a close on Friday with world leaders adopting a communiqué that contained new guidelines on sustainable and balanced growth. Agreements were reached on various agenda items, but the search for a resolution to the currency dispute, which was the most important issue, was postponed until the next G20 Summit in Cannes, France next year.
The communiqué only says G20 member countries vowed to start "moving toward more market-determined exchange rate systems, enhancing exchange rate flexibility to reflect underlying economic fundamentals, and refraining from competitive devaluation of currencies." While reconfirming the agreements made at the G20 Finance Ministers and Central Bank Governors Meeting in Gyeongju last month, it added a new pledge to enhance "exchange rate flexibility."
The world leaders agreed to come up with guidelines by the first half of next year on how to manage their current account surpluses or deficits, which would offer a solution to the currency dispute. Although they managed to take one step further from the points agreed in Gyeongju, concrete agreements have been put off.
For Korea as the host, the results leave something to be desired. But solving the currency dispute and setting guidelines for current account balances were not the only goals of the summit. Milestones were set by tightened regulations to prevent another global financial crisis, and agreements to create a global financial safety net, seek macroeconomic policy coordination among different countries, and get the ball rolling on economic support for developing countries.
Regarding a cooperative system for "sustainable and balanced growth" as agreed at the G20 Summit in Pittsburgh last year, world leaders included in an annex to the communiqué policy pledges by individual countries for currency, trade, fiscal budgets, financial reforms and structural changes. Individual countries have embarked on cooperative efforts to correct the imbalances of the global economy. Policy recommendations were made to tighten regulations governing large banks.
There was notable progress in the creation of a global financial safety net and providing support for developing countries, which had been proposed by Korea. World leaders fine-tuned the International Monetary Fund's loan system so it can provide emergency rescue funds before financial crises break out, and they also agreed to boost cooperation between the IMF and regional financial safety nets.
The first-ever G20 Business Summit was another notable event. It was attended by 120 top CEOs from around the world, and brought political leaders and business executives under one roof to discuss the direction the global economy should take. IMF stake reforms that were agreed in Gyeongju last month are being hailed as the first step toward remapping the global power structure.
The communiqué dubbed the Seoul Declaration contains measures to realize the agreements reached during four G20 summits that were held since November 2008, when the first summit was held in Washington just after the global financial crisis erupted. While reflecting changing global economic conditions since the financial crisis, it also contains measures aimed at embracing a majority of the world's emerging and developing countries.
But it remains to be seen whether the G20 will truly become the world's top economic decision-making body, because consensus about the economic crisis and a sense of urgency among G20 countries are diminishing.
The Seoul Summit was the first G20 summit hosted by a country not in the old G7 that encompassed the U.S., Japan, Germany, France, the U.K., Italy and Canada. The foreign press said the event was a "coming-of-age ceremony" for Korea in the global arena. It was an historic event for a country that rose from the ashes of war and colonial occupation to be able to provide the setting for the discussion of global economic policies.
Korea also demonstrated leadership by mediating and fine-tuning conflicting issues between major countries. It showed the world that it can play a central role in global diplomacy and was a huge confidence builder. Those are probably the biggest legacies of the G20 Seoul Summit.