Vol 66 G20 Cannes Summity - Contagion - 4

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G20: Cannes Summit Volume 66 / November 2011

FINANCIAL ADVISORFINANCIAL ADVISORPRACTICE JOURNALPRACTICE JOURNAL

JOURNAL OF THE SECURITIES ACADEMY AND FACULTY OF e-EDUCATION

SAFE UPDATES – KEEP INFORMEDThe Securities Academy and Faculty of The Securities Academy and Faculty of

e-Educatione-Education



G20: Cannes Summit

Editor: CA Lalit Mohan Agrawal

INDEXMonth: November 2011Title: Contagion – 4: G-20 Cannes SummitEditor : CA Lalit Mohan Agarwal

66 th Financial Advisor Practice JournalS.No.

Section Name Topic

1.1 Editorial Preamble: Will G-20 walk the talk?1.2 Stock Markets The Coming Global Credit Glut

1 st Week of November: Sensexdown 242 points

Markets decline as global bourses weigh

2 nd Week of November: Sensexdown 370 points

Sensex ends in red for secondconsecutive week

1.3 Financial Sector Implementing and deepening Financialsector reforms

2.1 Indian Economy PM Singh’s statement ahead of CannesG20 Summit

2.2 International G20 summit: A Greek tragedy and agrand failure

2.3 Warning Signals No Crowning Glory for Sarkozy atCannes Summit

3.1 Commodity Market Addressing Food Price Volatility3.2 Energy Market Improving the functioning of Energy

Markets4 Financial Sector – Transforming Tomorrow Welcome from the French G20

Presidency4.1 Financial Advisors The Cannes Action Plan for Growth and Jobs4.2 Financial Planners Addressing Short-term Vulnerabilities and

Restoring Financial Stability4.3 Risk Management Consultants Strengthening the Medium-term

Foundation for Growth4.4 Credit Counsellors Contd/… Strengthening the Medium

term ….4.5 Issues Of The Present Communiqué

5 International Monetary System (IMS) Building a More Stable and Resilient IMS

6.1 Tax updates Tackling tax havens and non-cooperative jurisdictions

6.2 Security Law Updates Strengthening the FSB capacity andgovernance



G20: Cannes Summit7 Miscellaneous Updates - Protecting Marine Environment

- Fostering Clean energy, Green Growthand

Sustainable Development- Pursuing the Fight against ClimateChange- Avoiding protectionism and

Reinforcing Multilateral Trading System

8 Social Security Obligations - Development: Investing for GlobalGrowth- Intensifying our Fight againstCorruption- Governance

9 Knowledge Resource Key outcomes of G20 Cannes SummitWords From The Managing Trustee

Without Any Concrete Plans On the table, The Cannes Summit is being Termed as aFailure -

Making the Possibility of a Second Recession More Real Than Ever Before

Editorial preamble 1.1 CANNES SUMMIT

Will G-20 walk the talk?

In the week ahead of the just-concluded meetings of the Group of Twenty (G-20) nations at Cannes, two events unfolded. First, Japanintervened in the currency market to shore up the yen, taking financialmarkets by surprise. Second, even more unexpectedly, Greek PrimeMinister George Papandreou announced that he would be seeking areferendum on the bailout package approved for Greece, whichrequired the implementation of politically difficult austerity measures.

It couldn’t have augured worse for the host country President Nicolas Sarkozy. While one demonstrateddisdain for global coordination, the latter was a virtual rejection of the bailout plan hammered together bySarkozy and German Chancellor Angela Merkel. It also put the onus back on Europe, when it was hopingto use the Cannes summit to look beyond the immediate objective of firefighting a crisis, which if unchecked could rapidly deteriorate into a global contagion of devastating proportion.

Naturally, the two-day summit focused almost entirely on salvaging the situation forced upon the world by Greek Prime Minister Papandreou. While officially everybody was silent – in fact, the officialcommuniqué almost ignores Greece, excepting for a passing reference – there is no doubt that Sarkozyand Merkel, backed by an unusually subdued US, eventually restored the status quo by forcingPapandreou to drop the referendum. However, it came at a price. The political economy of Papandreou’saction is that it exposed the structural flaws – and more importantly, it forced a discussion on the fact thatEurope is a monetary union, but not a fiscal one – of the European Union, and also revealed how theworld is poised on a knife’s edge, especially if we throw in the globalisation of discontent againstgrowing inequalities, both within and among nations, and joblessness.



G20: Cannes SummitSo the big question to ask is whether the G-20 summit addressed these concerns: the short-term crisis thatis still hanging over Europe and consequently the whole world, and a long-term view on fixing growinginequality. The answer, going by cues dropped by some of the global leaders, as always at the end of suchsummits is a vague “yes”. But then, talk is cheap: the big question is whether the global leaders, several of whom are up for re-election, are willing to walk the talk.

To address the structural issue of inequality, it is clear that the G-20 is looking to do so by putting in placea growth process that will generate more jobs. And this in turn has been presaged on a rebalancing of global economic growth – euphemism for getting China and Germany to underwrite the bad times.

Interestingly, the action plan for growth and jobs finalised at the end of the G-20 summit has managed toget the Chinese to make such a specific commitment. It is a big step forward as it signals China’swillingness to shoulder multilateral commitments. According to the action plan, China has committed torebalance demand toward domestic consumption, promote a market-based interest rate reform, and movefurther toward capital account convertibility.

As far as the financial markets are concerned, the G-20 summit, despite being sandbagged by Greece, hasmanaged to come out making all the positive noises. The issue is whether the jittery markets have the

courage to ask the obvious question: is this all talk, or will there be follow through action? Because, whileconfidence-building measures are important in shoring up confidence, the failure to follow up withconcrete action, most of which is politically difficult to achieve, only means kicking the can further downthe street; the only difference is that this time the day of reckoning may be weeks and not months away.1.2 STOCK MARKETS

The Coming Global Credit Glut

With world leaders meeting at the G-20 summit in Cannes, France, the next economic minefield that theywill face is already coming into view. It is likely to take the form of an opaque global credit glut,turbocharged by the fragile mixture of too-big-to-fail global banking with a huge and largely unwatchedand unregulated shadow banking sector.

We urgently need to understand the role of shadow bankingand too-big-to-fail banks in creating a global credit glut, saysAndrew Sheng, president of the Fung Global Institute and formerchairman of the Hong Kong Securities and Futures Commission.

.To be sure, that is not what many see. Federal Reserve Board Chairman Ben Bernanke and others have

blamed the financial crisis of 2008 on a global savings glut, which fuelled flows of money from high-savings emerging-market economies – especially in Asia – that run chronic balance-of-payments

surpluses. According to this school of thought, excessive savings pushed long-term interest rates down torock-bottom levels, leading to asset bubbles in the United States and elsewhere.

But Claudio Borio and Piti Disayat, economists at the Bank for International Settlements, have arguedconvincingly that the savings-glut theory fails to explain the unsustainable credit creation in the run-up tothe 2008 crisis. They have shown that the major capital inflows were not from emerging markets, butfrom Europe, where there was no net balance-of-payments surplus.



G20: Cannes SummitThe alternative theory – of a global credit glut – gained more groundwith the release of the Financial Stability Board’s report on shadow

banking. The FSB report contains startling revelations about thescale of global shadow banking, which it defines as “creditintermediation involving entities and activities outside the regular

banking system.”

The shadow banking system is estimated at roughly 25-30% of theglobal financial system ($250 trillion, excluding derivatives) and athalf of total global banking assets. This represents a huge regulatory“black hole” at the center of the global financial system, hitherto notclosely monitored for monetary and financial stability purposes.They are complex, because it comprises a mix of institutions andvehicles. Their combined credit creation and proprietary trading andhedging may account for much of the global liquidity flows thatmake monetary and financial stability so difficult to ensure.

The trouble is that, by 2010, the shadow banking system was about

the same size as it was just before the 2007 market crash, whereasthe regulated global banking system was 18% larger than in 2007.That is why the FSB report pinpoints the shadow banking system, together with the large global banks, assources of systemic risk.

But the global problem is likely to be much larger than the sum of its parts. Specifically, global creditcreation by the regular and shadow banking systems is likely to be significantly larger than the sum of thecredit creation currently measured by national statistics.

There are several reasons for this. First, credit that can be, and is, created offshore and through off- balance-sheet SIVs is not captured by national balance-of-payments statistics. In other words, while a

“savings” glut may contribute to low interest rates and fuel excess credit creation, it is not the main cause.

Second, the volatile “carry trade” is notoriously difficult to measure, because most of it is conductedthrough derivatives in options, forwards, and swaps, which are treated as off-balance sheet – that is, as netnumbers that are below the line in accounting terms. Thus, in gross terms, the leverage effects are larger than currently reported.

Third, the interaction between the shadow banking system and the global banks is highly concentrated, because the global banks act as prime brokers, particularly for derivative trades. Data from the USComptroller of Currency suggest that the top five US banks account for 96% of the total over-the-counter (OTC) derivative trades in the US.

Indeed, the nightmare scenario haunting the world is the collapse of another shadow banking entity,causing global trade to freeze, as happened in 2008. The Basel III agreement on capital adequacy andother recent reforms still have not ring-fenced trade financing from these potential shocks.

We urgently need to monitor and understand the role of shadow banking and the too-big-to-fail banks increating the global credit glut. Obtaining a full picture of global monetary and credit numbers and their determinants is a vital first step.

So far, the G-20’s call to “think globally” has turned into “act locally.”



G20: Cannes Summit

1 st week of November: Sensex down 242 points

Dailyreview

28/10/11 31/10/11 01/11/11 02/11/11 03/11/11 04/11/11

Sensex 17,804.80 (99.79) (224.18) (15.98) 17.08 80.68Nifty 5,360.70 (34.10) (68.65) 0.50 7.30 18.45

Weeklyreview

28/10/11 04/11/11 Points %

Sensex 17,804.80 17,562.61 (242.19) (1.36%)Nifty 5,360.70 5,284.20 (76.50) (1.43%)

Markets decline as global bourses weigh

Markets slipped this week as global concerns weighed on investor sentiments.The Sensex slipped 1.36% or 242.19 points this week to end at 17,562.61. Niftyshed 1.43% or 76.50 points to 5,284.20.

Markets could not extend last week's strong rally and slipped 100 points onMonday amidst weakness in the global economy. The Sensex consolidatedfurther on Tuesday as weakness persisted in the European markets. Thedownward movement continued on Wednesday as Doubts arose on the viabilityof the Greece-debt deal. The Sensex touched a low of 17,278 on Thursday but



G20: Cannes Summitmanaged to recover from there. Markets reversed trends on fresh hopes the EU bailout will be passed bythe Greek Parliament.

Food inflation, according to government data, rose to 12.21% during the week ended October 22, withexpensive vegetables, pulses, fruits and milk, putting more burdens on the common man. Food inflation,as measured by the Wholesale Price Index (WPI), stood at 11.43% in the previous week. Finance Minister Pranab Mukherjee expressed grave concern over rising food inflation, even as he attributed the latestspike in prices to increased demand during the festive season.

In other news, India's service sector contracted for a second straight month in October, as new businessgrew at its weakest pace since May 2009 dragged by sagging global demand and tight monetary policy.The seasonally adjusted HSBC Markit Business Activity Index, based on a survey of around 400 firms,slumped to 49.1 in October, its lowest reading in two-and-a-half years and below the 50-mark whichseparates growth from contraction. It was at 49.8 in September.

Also, the bail plea of DMK chief Karunanidhi’s daughter Kanimozhi has been rejected. Sharad Kumar,Rajeev Agarwal, Karim Morani and Asif Balwa's bail plea have been dismissed.

A government official said on Friday that Pakistan has backtracked after granting the Most Favoured Nation status to India in trade. This is likely to impact trade relations negatively between the two nations.

BSE auto index slipped 3.3% to 9,248 and was the biggest loser among sectoral indices. With theexception of a few, most automobile companies reported weak sales in October. Rising cost of ownershipand high interest rates have cooled down sales of passenger cars and commercial vehicles. BSE metalindex shed 2.4%, followed by the oil & gas index. However, the FMCG index gained 0.7% through theweek to end at 4,184. Most of the Sensex stocks also ended in red barring a few.

2nd

week of November: Sensex down 370 points

Dailyreview

04/11/11 07/11/11 08/11/11 09/11/11 10/11/11 11/11/11

Sensex 17,562.61 Holiday 6.92 (207.43) Holiday (169.28)Nifty 5,284.20 5.15 (68.30) (52.20)

Weeklyreview

04/11/11 11/11/11 Points %

Sensex 17,562.61 17,192.82 (369.79) (2.11%)Nifty 5,284.20 5,168.85 (115.35) (2.18%)

Sensex ends in red for second consecutive week

Registering its second consecutive decline, the BSE benchmark Sensexshed 2.11% during the truncated trading week ended November 11amid heavy selling pressure in realty, banking, metal, capital goods andPSU sectors. The market sentiment was bearish in view of lower IIPdata and unexpectedly poor quarterly results from some companies.The BSE and NSE were closed on November 7 on account of Eid-ul-Azha and on November 10 for Gurunanak Jayanti.



G20: Cannes Summit

The BSE Sensex fell by 369.79 points, or 2.11%, to end at 17,192.82 during the trading week ended November 11. The 50-share S&P CNX Nifty also declined by 115.35 points, or 2.18%, to 5,168.85.

The maximum fall in the key benchmark indices occurred at the fag-end of the week, following therelease of data that showed industrial production rose by a dismal 1.9% in September, 2011, the lowestrate of expansion in 2 years. Manufacturing, basic goods, consumer goods, consumer durables goodssectors showed less growth in the September as compared to a year ago period. But capital goods andmining sectors' growth came in negative. Arun Singh, Senior. Economist, D&B India believes the sharpdeceleration in IIP growth reaffirms the slowdown in the economic activity. The capital goods yet again

plummeted into the negative territory pointing to the rising interest rates, high inflation and weak globaland domestic sentiment taking its toll on the investment activity.

Banking stocks fell as the 10-year benchmark bond yield approached 9% during the week. State Bank of India was the big loser during the week, losing 8.48% following the announcement of an increase in the

bank's bad loans in the second quarter ended September, 2011. SBI reported higher-than-expected NPAsand Moody's downgrade of the Indian banking system to 'negative' from 'stable' was enough to createcapitulation in stocks. Exposure to Kingfisher Airlines too added to the injury of banks. ICICI Bank, SBI

and IDBI Bank have major exposure to debts of Kingfisher Airlines.

Markets were also lower on the back of continued concerns on Europe. European concerns continued toimpact global markets over the week with Italy being the new focus area. Greece has appointed a newPrime Minister and Italy is also expected to appoint one soon. Experts feel that the market will have tolive with the problems in eurozone. But the most worried fact is tax collections, which are not going up."Others causes of concerns” are - 10-year yields are going up and crude oil is not coming down.Depreciation in the rupee was another cause of concern.

1.3 FINANCIAL SECTORCannes Summit Final DeclarationImplementing and deepening Financial sector reforms

“Building Our Common Future:Renewed Collective Action For The Benefit Of All”4 November 2011

We are determined to fulfil the commitment we made in Washington in November 2008 to ensure that all financial markets, products and participantsare regulated or subject to oversight as appropriate to their circumstances in an

internationally consistent and non-discriminatory way.

Meeting our commitments notably on banks, OTCderivatives, compensation practices and credit rating agencies, andintensifying our monitoring to track deficiencies

Improving banks’ resilience to financial and economic shocks:

• Building on progress made to date, we call on jurisdictions to meet their commitment to implement fully and consistently the Basel II risk-based framework



G20: Cannes Summitas well as the Basel II-5 additional requirements on market activities and securitization by end 2011and the Basel III capital and liquidity standards, while respecting observation periods and reviewclauses, starting in 2013 and completing full implementation by 1 January 2019.

Reforming the OTC derivatives markets is crucial to build a more resilient financial system.

• All standardized over-the-counter derivatives contracts should be traded on exchanges or electronictrading platforms, where appropriate, and centrally cleared, by the end of 2012; OTC derivativescontracts should be reported to trade repositories, and non-centrally cleared contracts should besubject to higher capital requirements.

• We agree to cooperate further to avoid loopholes and overlapping regulations. A coordination group is being established by the FSB to address some of these issues, complementing the existing OTCderivatives working group. We endorse the FSB progress report on implementation and ask the CPSSand IOSCO to work with FSB to carry forward work on identifying data that could be provided byand to trade repositories, and to define principles or guidance on regulators’ and supervisors’ access todata held by trade repositories.

• We call on the Basel Committee on Banking Supervision (BCBS), the International Organization for Securities Commission (IOSCO) together with other relevant organizations to develop for consultation standards on margining for non-centrally cleared OTC derivatives by June 2012, and onthe FSB to continue to report on progress towards meeting our commitments on OTC derivatives.

Discouraging compensation practices that lead to excessive risk taking

We reaffirm our commitment to discourage compensation practices that lead to excessive risk taking byimplementing the agreed FSB principles and standards on compensation.

• While good progress has been made, impediments to full implementation remainin some jurisdictions. We therefore call on the FSB to undertake an ongoingmonitoring and public reporting on compensation practices focused on remaininggaps and impediments to full implementation of these standards and carry out anon-going bilateral complaint handling process to address level playing fieldconcerns of individual firms. Based on the findings of this ongoing monitoring,we call on the FSB to consider any additional guidance on the definition of material risk takers and the scope and timing of peer review process.

Reducing reliance on external credit ratings

We reaffirm our commitment to reduce authorities’ and financial institutions’ reliance on external creditratings, and call on standard setters, market participants, supervisors and central banks to implement theagreed FSB principles and end practices that rely mechanistically on these ratings.



G20: Cannes Summit• We ask the FSB to report to our Finance Ministers and Central Bank Governors at their February

meeting on progress made in this area by standard setters and jurisdictions against these principles.

Intensify our monitoring of financial regulatory reforms

We agree to intensify our monitoring of financial regulatory reforms, report on our progress and track our deficiencies.

• To do so, we endorse the FSB coordination framework for implementation monitoring, notably on keyareas such as:

• The Basel capital and liquidity frameworks,• OTC derivatives reforms,• Compensation practices,• G-SIFI policies,• Resolution frameworks, and• Shadow banking.

This work will build on the monitoring activities conducted bystandard setting bodies to the extent possible. We stress the need toreport the results of this monitoring to the public including on anannual basis through a traffic lights scoreboard prepared by theFSB.

We welcome its first publication today and commit to take allnecessary actions to progress in the areas where deficiencies have

been identified.

Addressing the too big to fail issue

We are determined to make sure that no financial firm is “too big to fail” andthat taxpayers should not bear the costs of resolution.

To this end, we endorse the FSB comprehensive policy framework, comprisinga new international standard for resolution regimes, more intensive andeffective supervision, and requirements for cross-border cooperation andrecovery and resolution planning as well as, from 2016, additional lossabsorbency for those banks determined as global systemically importantfinancial institutions (G-SIFIs).

The FSB publishes today an initial list of G-SIFIs, to be updated each year in November. We willimplement the FSB standards and recommendations within the agreed timelines and commit to undertakethe necessary legislative changes, step up cooperation amongst authorities and strengthen supervisorymandates and powers.

We ask the FSB in consultation with the BCBS, to deliver a progress report by the G20 April Financemeeting on the definition of the modalities to extend expeditiously the G SIFI framework to domesticsystemically important banks. We also ask the IAIS to continue its work on a common framework for thesupervision of internationally active insurance groups, call on CPSS and IOSCO to continue their work on



G20: Cannes Summitsystemically important market infrastructures and the FSB in consultation with IOSCO to preparemethodologies to identify systemically important non-bank financial entities by end-2012.

Filling in the gaps in the regulation and supervision of the financial sector

Bank-like activities

The shadow banking system can create opportunities for regulatory arbitrage and cause the build-up of systemic risk outside the scope of the regulated banking sector.

To this end, we agree to strengthen the regulation and oversight of the shadow banking system and endorse the FSB initial elevenrecommendations with a work-plan to further develop them in the

course of 2012, building on a balanced approach between:

• Indirect regulation of shadow banking through banks and

• Direct regulation of shadow banking activities, including money markets funds, securitization,securities lending and repo activities, and other shadow banking entities.

We ask Finance Ministers and Central Bank Governors to review the progress made in this area at their April meeting.

Markets

We must ensure that markets serve efficient allocation of investments andsavings in our economies and do not pose risks to financial stability.

To this end, we commit to implement initial recommendations by IOSCOon market integrity and efficiency, including measures to address the risks posed by high frequencytrading and dark liquidity, and call for further work by mid-2012. We also call on IOSCO to assess thefunctioning of credit default swap (CDS) markets and the role of those markets in price formation of underlying assets by our next Summit. We support the creation of a global legal entity identifier (LEI)which uniquely identifies parties to financial transactions. We call on the FSB to take the lead in helpingcoordinate work among the regulatory community to prepare recommendations for the appropriategovernance framework, representing the public interest, for such a global LEI by our next Summit.

Commodity markets

We welcome the G20 study group report on commodities and endorse IOSCO’sreport and its common principles for the regulation and supervision of commodity derivatives markets. We need to ensure enhanced markettransparency, both on cash and financial commodity markets, including OTC,and achieve appropriate regulation and supervision of participants in thesemarkets. Market regulators and authorities should be granted effectiveintervention powers to address disorderly markets and prevent market abuses. In

particular, market regulators should have, and use formal position management powers, including the power to set ex-ante position limits, particularly in the delivery month where



G20: Cannes Summitappropriate, among other powers of intervention. We call on IOSCO to report on the implementation of its recommendations by the end of 2012.

Consumer protection

We agree that integration of financial consumer protection policies into regulatoryand supervisory frameworks contributes to strengthening financial stability, endorsethe FSB report on consumer finance protection and the high level principles onfinancial consumer protection prepared by the OECD together with the FSB. Wewill pursue the full application of these principles in our jurisdictions and ask theFSB and OECD along with other relevant bodies, to report on progress on their implementation to the upcoming Summits and develop further guidelines if appropriate.

Other regulatory issues

We are developing macro-prudential policy frameworks and tools to limit the build-up of risks in thefinancial sector, building on the ongoing work of the FSB-BIS-IMF on this subject.

We endorse the joint report by FSB, IMF and World Bank on issues of particular interest to emergingmarket and developing economies and call international bodies to take into account emerging market anddeveloping economies’ specific considerations and concerns in designing new international financialstandards and policies where appropriate. We reaffirm our objective to achieve a single set of high qualityglobal accounting standards and meet the objectives set at the London summit in April 2009, notably asregards the improvement of standards for the valuation of financial instruments. We call on the IASB andthe FASB to complete their convergence project and look forward to a progress report at the FinanceMinisters and Central Bank governors meeting in April

2012. We look forward to the completion of proposals to reform the IASB governance framework.

2.1 INDIAN ECONOMY PM Manmohan Singh's statement ahead of Cannes G20 Summit November 2, 2011,

"I leave today to attend the G-20 Summit in Cannes, France at theinvitation of President Nicolas Sarkozy. The Cannes Summit takes

place against the backdrop of the sovereign debt crisis in theEurozone. This crisis has emerged as the principal source of concernfor the global economy.

The twin Summits of the European Union and Eurozone a few days

ago have helped to restore a measure of confidence in the markets, butmuch more needs to be done. It is imperative that the difficultdecisions needed to address the economic challenges in Europe andelsewhere are taken swiftly.

The Eurozone is a historic project. India would like the Eurozone to prosper, because in Europe's prosperity lies our own prosperity. It is important for the Cannes Summit to signal a strong andcoordinated approach to put the global economy back on track, while addressing medium term structuralissues. Developing economies such as India need a conducive global economic environment to addressthe vast challenges they face.



G20: Cannes Summit

In an increasingly interdependent world, we have to be wary of contagion effects and the import of inflationary pressures in our economy. We need to ensure that developing countries have access torequisite funds through multilateral development banks and to investible surpluses to meet their infrastructure and other priority needs.

The issue of global governance will also come up for discussion. This is an issue of importance to India,and we will work with others to develop effective and representative global governance mechanisms andcarry forward the process of reform of the international monetary and financial system.

I will separately hold a bilateral meeting with President Nicolas Sarkozy during my visit. I also look forward to meeting (British) Prime Minister David Cameron, (Australian) Prime Minister Julia Gillard, aswell as the European Union leaders Mr. Herman Van Rompuy and Mr. Jose Manuel Barroso."

Singh, who will be at the G20 summit for the sixth consecutive time since it was first hosted by the US in2008, is also likely to push through India's agenda for voluntary exchange of tax information to curb black money. Singh is accompanied by Deputy Chairman Planning Commission Montek Singh Ahluwalia and

National Security Advisor Shiv Shankar Menon. India wants the G20, which accounts for 85% of the

global output and 2/3 rd of the world population, to include new measures to clamp tax violation channels.

The two-day meet will be dominated by efforts by European leaders to resolve the sovereign debt crisisafter the 17-nation Eurozone sealed a deal last month critical for global economic recovery.

The summit hosted by French President Nikolas Sarkozy is expected to seek commitments from all G20members on growth and on rebalancing public finances.

US President Barack Obama, British Premier David Cameron and Chinese President Hu Jintao will beamong the world leaders at the critical summit.

2.2 INTERNATIONALG20 summit: A Greek tragedy and a grand failure

After two days of hectic talks in Cannes by top world leaders to resolve theEurozone debt crisis, the G20 Summit is being seen as a failure. The bigger worry now is that the spillover from Europe will lead to another downturn.

Nicholas Sarkozy, the host of the sixth G20 Summit, was hoping that itwould go beyond being just a photo opportunity for the world's most

powerful leaders. Gathered in the glitzy French beach town of Cannes, hewanted to use the summit as an opportunity to tell the world that a plan to

deal with the European debt crisis had finally been made.

But it soon became a Greek tragedy in Cannes with developments in Greecehijacking the G20 agenda.

The idea of a Greek referendum came as quickly as it went.

At a meeting of BRICS (Brazil, Russia, India, China and South Africa) countries on the sidelines of theG20 summit, leaders of emerging economies agreed that any support for debt-ridden Eurozone must berouted through the International Monetary Fund (IMF).



G20: Cannes Summit

But experts say the G20 summit has ended in disarray with no specifics on how the war-chest of the IMFwill be increased. Financial markets have already given their verdict that they are unimpressed with theoutcome.

"If anyone thought that the Eurozone crisis, which has been in the offing for the last three years, will melt,as a result of a one-and a half day conference, I think it was an over-exuberance in thinking," PrimeMinister Manmohan Singh. "After two days of very substantial discussions, I can say that we have come together and made important

progress to put our economic recoveries on a firmer footing," said US President Barack Obama.

It seemed like a desperate attempt on the part of President Obama to close the summit on a positive noteand to send a message that would boost global confidence. But without any concrete plans on the table,the summit is being termed as a failure making the possibility of a second recession more real than ever

before.

2.3 WARNING SIGNALSG-20: No Crowning Glory for Sarkozy at Cannes Summit

The slogan is dotted on bus stop advertising billboards bus stops all over this French Riveria city, summing up the grand ambitions President

Nicolas Sarkozy had for France's presidency of the Group of 20 leadingnations: "History is being written in Cannes."

France staked out big plans for its year-long leadership of the G20,targeting reform of the international monetary system, combating

commodity price volatility and reforming global governance.

In the end, there was no big bang. The Cannes summit was overwhelmed by the euro-zone's debt crisis and the inability of the elite group to itself provide any answers to jumpstart the global economy.

Editorialist Alexandre Delaigue at French newspaper Liberation said thesummit was like the orchestra playing on the Titanic as the ship went down.



G20: Cannes SummitSarkozy had promised only a few weeks ago to present the definitive solution to the euro-zone's crisis atthis gathering. Instead, Europeans were reduced to pushing negotiations on how their international

partners could help them out. No solution was found, and the can was kicked down the road.

"An all too familiar G-20 meeting has just concluded with many promises made, many of which have been made, and broken, in the past," said HSBC Senior Global Economist Karen Ward.

The 56 year-old president was defiant, describing progress as "spectacular" relative to France's goals. Buthe acknowledged monetary system reform--which France had emphasized above all else--is a long term

project for the coming years.

Sarkozy said progress had been made too on things like tax havens and getting a mention of the idea of afinancial transaction tax into the final communique, even if the hosts of some of the world's biggestfinancial markets are firmly against the idea.

The reality is Sarkozy's presidency of the G20 was hijacked by the euro zone crisis, with the Cannessummit dominated by the political turmoil in Greece, a tiny Mediterranean country that is not even amember of the G20.

Sarkozy is fighting to get France's public finances under control, a battle that is expected to lead to moreausterity plans in coming weeks after Moody's Investors Service warned the outlook on the country'striple-A rating is under pressure.

The fallout from Cannes could have political repercussions for Mr.Sarkozy, who is widely expected toseek reelection next spring.

Socialist presidential candidate Francois Hollande was quick to offload some stinging criticism,describing Sarkozy as an "animator" rather than a "player" in financial regulation. "Europe appeared in a

position of weakness," Mr. Hollande told French radio Europe 1.

3.1 COMMODITY MARKETSCannes Summit Final Declaration

Addressing Food Price Volatility and Increasing Agriculture Production andProductivity


Increasing agricultural production and productivity is essential to promotefood security and foster sustainable economic growth.

• A more stable, predictable, distortion free, open and transparent tradingsystem allows more investment in agriculture and has a critical role to

play in this regard.

• Mitigating excessive food and agricultural commodity price volatility isalso an important endeavour.



G20: Cannes SummitThese are necessary conditions for stable access to sufficient, safe and nutritious food for everyone. Weagreed to mobilize the G20 capacities to address these key challenges, in close cooperation with allrelevant international organisations and in consultation with producers, civil society and the privatesector. Our Agriculture Ministers met for the first time in Paris on 22-23 June 2011 and adopted theAction Plan on Food Price Volatility and Agriculture.

We have decided to act on the five objectives of this Action Plan:

(i) Improving agricultural production and productivity,

(ii) Increasing market information and transparency,

(iii) Reducing the effects of price volatility for the most vulnerable,

(iv) Strengthening international policy coordination and

(v) Improving the functioning of agricultural commodity derivatives’ markets.

We commit to sustainably increase agricultural production and productivity. To feed a world population expected to reach more than 9 billion people by 2050, it is estimated that agricultural production willhave to increase by 70% over the same period.

We agree to further invest in agriculture, in particular in thepoorest countries, and bearing in mind the importance of smallholders, through responsible public and private investment. Inthis regard, we decide to:

- Urge multilateral development banks to finalise their joint action

plan on water, food and agriculture and provide an update on itsimplementation by our next Summit;

- Invest in research and development of agricultural productivity. As a first step, we support the“International Research Initiative for Wheat Improvement” (Wheat Initiative), launched in Paris onSeptember 15, 2011 and we welcome the G20 Seminar on Agricultural Productivity held in Brusselson 13 October 2011 and the first G20 Conference on Agricultural Research for Development, held inMontpellier on 12-13 September 2011, designed to foster innovation-sharing with and amongdeveloping countries.

We commit to improve market information and transparency in

order to make international markets for agricultural commoditiesmore effective. To that end, we launched :

- The “Agricultural Market Information System” (AMIS) in Rome onSeptember 15, 2011, to improve information on markets. It willenhance the quality, reliability, accuracy, timeliness and comparabilityof food market outlook information. As a first step, AMIS will focus itswork on four major crops: wheat, maize, rice and soybeans. AMIS



G20: Cannes Summitinvolves G20 countries and, at this stage, Egypt, Vietnam, Thailand, the Philippines, Nigeria, Ukraine andKazakhstan. It will be managed by a secretariat located in FAO;

- The “Global Agricultural Geo-monitoring Initiative” in Geneva on September 22-23, 2011. Thisinitiative will coordinate satellite monitoring observation systems in different regions of the world inorder to enhance crop production projections and weather forecasting data.

We recognize that appropriately regulated and transparent agricultural financial markets are a key for well-functioning physical markets and risk management. We welcome IOSCO recommendations oncommodity derivatives endorsed by our Finance Ministers.

We commit to mitigate the adverse effects of excessive price volatility for the most vulnerable throughthe development of appropriate risk-management instruments.

According to the Action Plan, we agree to remove food export restrictions or extraordinary taxes for food purchased for non-commercial humanitarian purposes by the World Food Program and agree not toimpose them in the future. In this regard, we encourage the adoption of a declaration by the WTO for theMinisterial Conference in December 2011.

We have launched a “Rapid Response Forum” in Rome on September 16, 2011 to improve theinternational community’s capacity to coordinate policies and develop common responses in time of market crises.

We welcome the production of a report by the international organizations on how water scarcity andrelated issues could be addressed in the appropriate fora.

We commend the joint work undertaken by FAO, OECD, The World Bank Group, IFAD, UNCTAD,WFP, WTO, IMF, IFPRI and the UN HLTF to support our agenda and we request that they continueworking closely together.

We will keep progress on the implementation of the Action Plan on Food Price Volatility and Agriculture.

3.2 ENERGY MARKETSCannes Summit Final Declaration

Improving the functioning of Energy Markets

We stress the importance of well-functioning and transparent physicaland financial energy markets, reduced excessive price volatility,improved energy efficiency and better access to clean technologies, toachieve strong growth that is both sustainable and inclusive. We arecommitted to promote sustainable development and green growth andto continue our efforts to face the challenge of climate change.

We commit to more transparent physical and financial energy markets.Commodity derivatives are being addressed as part of our financialregulation reform agenda. We have made progress and reaffirm our commitment to improve the timeliness, completeness and reliability of the JODI-Oil database as soon as possible. We also commit to supportthe IEF – JODI work in order to improve the reliability of JODI-Oil



G20: Cannes Summitand look forward to receiving their recommendations. We will regularly review and assess progress madeon this front.

We welcome the IEF Charter’s commitment to improve dialogue between oil producer and consumer countries, as well as the holding on January 24, 2011 of the Riyadh Symposium on short, medium andlong term outlook and forecasts for oil markets. We call for those meetings to be held on an annual basisand for the IEF, the IEA and OPEC to release a joint communiqué and a report highlighting their outcomes.

We note the new JODI-Gas database and commit to work on contributing to it on the basis of the same principles as the JODI-Oil database. We also call for annual symposiums and communiqués on short,medium and long term outlook and forecasts for gas and coal. We call for further work on gas and coalmarket transparency and ask the IEA, IEF and OPEC, to provide recommendations in this field by mid-2012.

Recognizing the role of Price Reporting Agencies for the proper functioning of oil markets, we ask IOSCO, in collaboration with the IEF, the IEA and OPEC, to prepare recommendations to improve their functioning and oversight to our Finance Ministers by mid-2012.

We reaffirm our commitment to rationalise and phase-out over the medium term inefficient fossil fuel subsidies that encouragewasteful consumption, while providing targeted support for the

poorest. We welcome the country progress reports onimplementing strategies for rationalizing and phasing outinefficient fossil fuel subsidies, as well as the joint report fromthe IEA, OPEC, OECD and the World Bank on fossil fuels andother energy support measures. We ask our Finance Ministersand other relevant officials to press ahead with reforms andreport back next year.

4. FINANCIAL SECTOR: TRANSFORMINGTOMORROW

G20 Leaders Summit – Cannes – 3-4 November 2011 Welcome From the French G20 Presidency

France is very honored to chair the Group of Twenty in 2011.

The G20 was established in 1999, in the wake of the 1997 Asian FinancialCrisis, to bring together major advanced and emerging economies to stabilize theglobal financial market. Since its inception, the G20 has held annual FinanceMinisters and Central Bank Governors' Meetings and discussed measures to

promote the financial stability of the world and to achieve a sustainableeconomic growth and development.

To tackle the financial and economic crisis that spread across the globe in 2008,the G20 members were called upon to further strengthen international



G20: Cannes Summitcooperation. Accordingly, the G20 Summits have been held in Washington in 2008, in London andPittsburgh in 2009, and in Toronto and Seoul in 2010.

The concerted and decisive actions of the G20, with its balanced membership of developed anddeveloping countries helped the world deal effectively with the financial and economic crisis, and theG20 has already delivered a number of significant and concrete outcomes:

First, the scope of financial regulation has been largely broadened and prudential regulation andsupervision have been strengthened. There was also great progress in policy coordination thanks to thecreation of the framework for a strong, sustainable and balanced growth designed to enhancemacroeconomic cooperation among the G20 members and therefore to mitigate the impact of the crisis.Finally, global governance has dramatically improved to better take into consideration the role and theneeds of emerging of developing countries, especially through the ambitious reforms of the governance of the IMF and the World Bank.

Building on these important progresses, the G20 has now to adapt to a new economic environment. Itmust prove that it is able to coordinate the economic policies of major economies on an ongoing basis.

2011 will be the occasion to build on the recent successes of the G20 and ensure an active follow-up on processes already underway. It will also be the time to address other essential issues which are crucial toglobal stability such as the reform of the international monetary system and the volatility of commodity

prices.

We believe indeed that today's key economic challenges require a collective and ambitious action whichthe G20 is able to impulse.

4.1. FINANCIAL ADVISORS :Weigh impact on investors:

The Cannes Action Plan for Growth and Jobs

The global economy has entered a new and difficult phase. Globalgrowth has weakened, downside risks have heightened, andconfidence has waned. Uncertainty over the sustainability of publicdebt levels in some advanced economies has increased, and therebalancing in demand from the public to the private sector andfrom the external to the domestic sector has not materialized.

• In Europe, sovereign debt risks in some countries havegenerated a difficult dynamic of rising interest costs and stresses



G20: Cannes Summitin the banking system, which are now weighing on confidence and real activity in the euro area.Growth in the euro area is now projected to be weaker and unemployment higher.

• In the US, the recovery has been shallower than expected. The desired rebound in private demand hasnot materialized due to a combination of weak job growth, the ongoing correction in the housingsector and the associated rebuilding of household balance sheets. More certainty and determinationover medium-term fiscal consolidation will contribute to the strengthening of growth.

• In emerging markets, there are also clear signs of a slowing in growth as developments in advancedeconomies begin to weigh on these countries. In some emerging market economies, financial stabilityand overheating risks remain. The lack of exchange rate flexibility in some countries limits policyoptions to deal with these risks.

In the face of these challenges, we agree that strengthened international policy cooperation is needed now.We have agreed on an Action Plan to address short-term vulnerabilities and strengthen medium-termfoundations for growth.

We are firmly committed to support the recovery, ensure financial stability and restore confidence. Onlythrough collective actions on all of these fronts will we move closer to stronger, more sustainable and

balanced growth. Our ultimate objective is to provide more and better jobs for our citizens, to promotesocial inclusion in all countries, and to foster development and poverty reduction particularly in lessdeveloped countries around the globe.

We have met our Seoul commitment to develop indicative guidelines to assess persistently largeimbalances. This Action Plan reflects the views of the G20 and draws on the IMF Staff’s independentassessments of the root causes of these imbalances and recommended policies to address them.

We hereby commit to decisively pursue the introduction of the following actions without delay.

4.2 FINANCIAL PLANNERSValue unlocking for all stakeholders :

Addressing Short-term Vulnerabilities and Restoring Financial Stability

We have agreed on a plan to sustain the near-term recovery, promotegrowth and restore financial stability in a manner that complements our medium-term reforms:

1. We commit to take all necessary actions to preserve the stability of banking systems and financial markets . We will ensure that banks areadequately capitalized and have sufficient access to funding to deal withcurrent risks. Central Banks continue to stand ready to provide liquidityto banks as required.



G20: Cannes Summit2. G-20 members agree to implement an appropriate mix of measures to secure the recovery.

a) Monetary policies will maintain price stability over the medium term and continue to support economicrecovery. As warranted by national circumstances, including medium term consolidation plans, monetary

policy will respond to changes in economic and financial market conditions subject to their likely impacton the medium-term outlook for price developments.

b) Advanced countries, taking into account different national circumstances, will adopt policies to buildconfidence and support growth, and implement clear, credible and specific measures to achieve fiscalconsolidation, including as set out in the country specific commitments below.

c) Governments in the euro area commit to take all necessary measures and actions needed to ensure thestability of the euro area and have adopted a comprehensive package.

(i) After having decided to flexibilise the EFSF instruments on the 21 July 2011, the 26 October euro area Summit agreed on a substantial leveraging of its resources up to 1 trillion euro.

(ii) Euro area countries agreed to significantly strengthen economic

and fiscal surveillance and governance of the euro area.

(iii) A particular effort in terms of fiscal consolidation and structuralreforms will be made by those euro area Member States that areexperiencing tensions in sovereign debt markets.

(iv) An exceptional solution was found to ensure the sustainability of the Greek public debt through a rigorous adjustment programme and a voluntary nominaldiscount on Greek debt held by private investors.

(v) Last, a comprehensive set of measures to raise confidence in the banking sector has been

agreed, including by facilitating access to term-funding where appropriate and temporarilyincreasing the capital position of large banks to 9% of Core Tier 1 capital after accounting for sovereign exposures by the end of June 2012, while maintaining the credit flow to the realeconomy and ensuring that these plans will not lead to excessive deleveraging.

d) Italy commits to reaching a rapidly declining debt-to-GDP ratio starting in 2012 and close to a balanced budget by 2013. This objective, based on the full implementation of the 60 billion euro fiscal

package approved during the summer, will be underpinned by the strengthening of thefiscal rules, stemming from both the European legislation and the introduction in theconstitution of the balanced budget rule. Italy commits to implement, fully and swiftly, thecomprehensive plan of growth enhancing structural reforms announced on October 26th.

We support the measures presented by Italy in the Euro Summit and the agreed detailedassessment and monitoring by the European Commission. In this context, we welcome Italy's decision toinvite the IMF to carry out a public verification of its policy implementation on a quarterly basis.

e) The US commits to the timely implementation of a package of near-term measures tosustain the recovery, through public investments, tax reforms, and targeted jobs measures,consistent with a credible plan for medium-term fiscal consolidation.



G20: Cannes Summitf) Japan commits to the expeditious implementation of substantial fiscal measures for reconstruction

from the earthquake estimated at least 19 trillion yen (about 4% of GDP), while ensuring the commitmentto medium-term fiscal consolidation.

g) Australia, Brazil, Canada, China, Germany, Korea and Indonesia, where public financesremain relatively strong, taking into account national circumstances, agree to let automaticfiscal stabilisers work and, should global economic conditions materially worsen, agree to takediscretionary measures to support domestic demand as appropriate, while maintaining their medium-term fiscal objectives.

h) Emerging market economies commit to adopting macroeconomic policies to enhancethe resilience of their economies and those in surplus will adopt macroeconomic policiesto move towards more domestic-led growth, thus supporting the global recovery andfinancial stability.

3. We affirm our commitment to move more rapidly toward market-determined exchange rate systemsand enhance exchange rate flexibility to reflect underlying fundamentals and refrain from competitivedevaluation of currencies. The actions above should help address challenges created by developments in

global liquidity and capital flow volatility, thus facilitating further progress on exchange rate reforms andreducing excessive accumulation of reserves. We welcome the recent changes to Russia’s foreignexchange regime to allow the rouble to move more in line with market forces and China’s determinationto increase exchange rate flexibility consistent with underlying market fundamentals.

4. We recognize the special circumstances of large commodity producers in terms of reserveaccumulation.

5. In all policy areas, we commit to minimize the negative spillovers on other countries of policiesimplemented for domestic purposes. We reaffirm our shared interest in a strong and stable internationalfinancial system, and our support for market-determined exchange rates. We reiterate that excess

volatility and disorderly movements in exchange rates have adverse implications for economic andfinancial stability.

6. We commit that the IMF must have adequate resources to fulfill its systemic responsibilities.

4.3 RISK MANAGEMENT CONSULTANTSEducate –and Engineer Enforce

Strengthening the Medium-term Foundations for Growth

We have agreed that the actions to address immediate risks torecovery must be complemented by sustained, broad-basedreforms to boost confidence, raise global output and create jobs.

We have agreed to a six-point plan to strengthen the medium-term foundations for growth:

1. Commitments to fiscal consolidation;



G20: Cannes Summit2. Commitments to boost private demand in countries with current account surpluses, and, where

appropriate, to rotate demand from the public to the private sector in countries with currentaccount deficits;

3. Structural reforms to raise growth and enhance job creation across G-20 members;

4. Reforms to strengthen national/global financial systems;

5. Measures to promote open trade and investment, rejecting protectionism in all its forms; and

6. Actions to promote development.

1. Commitments to fiscal consolidation:

Specific and concrete fiscal consolidation plansare essential to put public finances on a credibleand sustainable track, and are key to reducingcurrent account deficits (raising national savings),

which will further promote global rebalancing in anumber of large countries.

a) Australia, Canada, France, Germany, Italy,Korea, Spain, the UK, and the US reaffirm their Toronto commitment to clear and credible fiscalconsolidation plans to halve deficits by 2013 from 2010 levels, and stabilise or reduce government debt-to-GDP ratios by 2016. These plans will be robust to a range of economic outcomes, informed by prudenteconomic assumptions and, in some cases, reinforced with fiscal rules that take into account the economiccycle. In particular:

o The United States commits to place its debt-to-GDP ratio on a declining path no

later than the middle of the decade through a balanced deficit reduction plan that builds on the Budget Control Act of 2011, which enacted about $1 trillion indiscretionary savings over the next ten years and locked in at least an additional$1.2 trillion in deficit reduction beyond that. The plan will include: additionalspending reductions, among them reforms to entitlement programs; tax reform thatraises revenue, lowers rates, and cuts tax loopholes and expenditures; and stronger budgetary rules toenhance predictability and credibility. In combination with the Budget Control Act, these reforms willyield a total deficit reduction of $4 trillion over 10 years.

o France commits to reducing its fiscal deficit to 3% in 2013 through: tighter limits

on central government and health insurance expenditure; better targeted socialtransfers; a growth-friendly reduction of tax expenditures; and the inscription of existing fiscal rules into the Constitution to anchor stability.

o The UK reaffirms its commitment to its planned fiscalconsolidation and the detailed four-year departmentalexpenditure plans set out in the 2010 Spending Review. It willalso undertake structural reforms, including measures to ensuregrowth-friendly fiscal adjustment and measures to address



G20: Cannes Summitlong-term spending pressures and imbalances, such as managing future increases in the state pensionage more systematically in response to changes in longevity.

b) Japan commits to implementing the “Definite Plan for the Comprehensive Reform of Social Securityand Tax” which sets out policies including the gradual increase in the consumption tax to 10% by themiddle of this decade and to submitting implementing legislation by the end of FY2011 to realise these

policies, in order to meet its Toronto commitment.

c) India commits to strengthening revenue mobilization through tax reforms, including aunified goods and services tax, and overhauling the personal and corporate tax code.

2. Commitments to boost private demand in countries with current account surpluses, and, whereappropriate, to rotate demand from the public to the private sector in countries with currentaccount deficits:

Countries with large current account surpluses and those with relatively weak private

demand will play an important role in rebalancing and sustaining global demand.

a) Germany will implement measures to promote private consumption and investment,with the expectation that, expressed as a share of GDP, both components will increaseover time. Germany commits to taking measures aimed at strengthening domestic

demand, including by alleviating inefficiencies that may underpin lowinvestment and high private savings.



G20: Cannes Summit b) Recognizing that private demand has been relatively weak in recent years, Japan will implement

measures to promote private consumption and investment with the expectation that, expressed as ashare of GDP, both components will increase over time. This includes accelerating theimplementation of the “New Growth Strategy” comprising policies that will boost demand for a rangeof services

\c) China will rebalance demand towards domestic consumption by

implementing measures to strengthen social safety nets, increase householdincome and transform the economic growth pattern. These actions will be reinforced

by ongoing measures to promote greater exchange rate flexibility to better reflect underlying economic fundamentals, and gradually reduce the pace of accumulation of foreign reserves..

d) Other surplus economies recognise that they too have a significant role to play in promoting globalrebalancing and commit to encourage private spending (Indonesia, Korea). Indonesia has announced anational plan for infrastructure that will significantly increase private investment.

4.4 CREDIT COUNSELORSResolve convertibility and recompensation issue:

Cont/…Strengthening the Medium-term Foundations for Growth

3. Structural reforms to raise growth and enhance job creation acrossG-20 members:

Further progress on structural reforms is critical to raising output in all G-20 countries.

a) Structural reforms will be combined with active, flexible labour market policies and effective labour institutions that provide



G20: Cannes Summitincentives for increasing formal and quality jobs. Members commit to promote mobility andencourage participation, including tax and benefit reforms to reduce long-term unemployment andencourage the participation of older workers and women where appropriate.

b) Members will enhance competition and reduce distortions.

Actions include:

Infrastructure investment (Brazil, India, Indonesia, Mexico, Saudi Arabia, South Africa);

Supporting research, education and skills development and eliminating tariffs on machinery andmanufacturing inputs (Canada);

Reform of pricing for factors of production, promote market-based interest rate reform in an orderlymanner and gradually achieve RMB capital account convertibility as stated in its current 5-year plan(China);

Structural reforms in the services sector to boost productivity (France, Germany, Italy, Korea);

Tax reform aimed at a more employment-friendly taxation (Germany, Italy);

Raising standards of disclosure of information by financial institutions (Russia);

Phasing out wasteful and distortive subsidies in the medium term, while providing targeted support for the poor (India, Indonesia);

Reforms to energy efficiency and greater use of renewable and domestic energy resources (Turkey),agriculture (Argentina);

Enhanced regional integration to promote trade and investment (South Africa);

Improved practices and enhanced oversight of the short-term financing markets and reforms to help promote a rise in household savings as a share of GDP (US);

Transitioning to a clean energy economy through effective carbon price mechanism (Australia) and,

Efforts to promote green growth (Korea).

c) The EU is fully committed to accelerate and further deepen the Single Market integration through a

comprehensive programme based on twelve key priority actions to boost growth. These includeactions in the areas of services, trans-European networks, the digital single market, workers' mobility,financing for small and medium-sized enterprises and taxation. In the framework of the 'Europe 2020'strategy, the EU adopted several targets for 2020: to raise to 75% the employment rate for those aged20-64, to improve the education levels, and to raise the share of public and private investment levelsin R&D to 3% of EU's GDP.

d) We recognize the importance to the global economic recovery of maintaining stability in internationaloil markets, at a level consistent with global economic growth, as well as increasing transparency of energy policies in all countries.



G20: Cannes Summit

e) Saudi Arabia is committed to continue playing its systemic role in stabilizing the oil markets insupport of the global economy.

4. Reforms to strengthen national/global financial systems;

We commit to the full and timely implementation of the financial sector reformagenda agreed up through Seoul, including: implementing Basel II, II.5 and IIIalong the agreed timelines; more intensive supervisory effort; clearing andtrading obligations for OTC derivatives; standards and principles for sounder compensation practices, achieving a single set of high quality globalaccounting standards; a comprehensive framework to address the risks posed

by systemically-important financial institutions; and, strengthened regulationand oversight of shadow banking. We endorsed the joint IMF/WB/FSB reporton financial stability issues in emerging markets and developing economies.

5. Measures to promote open trade and investment, rejecting protectionism in all

its forms:We reaffirm our commitment to resist protectionism in all forms, rectify WTOinconsistent measures and advance the multilateral trade agenda, as agreed in Toronto.

6. Actions to promote development:

While reducing barriers to trade and investment will help reduce thedevelopment gap and support progress towards the Millennium DevelopmentGoals, further efforts to support capacity building and channelling of surplussavings for growth-enhancing investments in developing countries, including

infrastructure development, would also have positive spillovers for globalgrowth, rebalancing and development.

a) Improved market access for least developed countries should becomplemented with a strengthening of trade facilitation, trade finance and aid-for-trade programs toenhance their trade capacity.

b) Developing countries have the potential to contribute to stronger and more balanced global growthand should be viewed as markets for investment, especially in infrastructure. We welcome the MDBsInfrastructure Action Plan and the HLP recommendations. It is important to ensure adequate flows of official financing for development as well as to promote innovative approaches that leverage private

capital.We will also hold ourselves accountable for meeting our commitments to address near-termvulnerabilities and move ahead on reforms. We will enhance our reporting and monitoring in 2012 andfuture years, developing a framework to assess progress against our commitments for the reform of our fiscal, financial, structural, and monetary and exchange rate, trade and development policies. As agreed inSeoul, we will continue to use the indicative guidelines as a mechanism to assess progress in rebalancing,and the consistency of fiscal, monetary, financial sector, structural, exchange rate and other policies.



G20: Cannes SummitWe will continue to coordinate policy in the future as economic conditions evolve. Our Framework for Strong, Sustainable and Balanced Growth is not a point in time exercise, but a dynamic process to adjustto developments.

We ask our Finance Ministers to work closely together in the coming months to address vulnerabilitiesand sustain recovery.

4.5 ISSUES OF THE PRESENTFreedom to get & fail in the system of free enterprise : G20 Leaders Summit – Cannes – 3-4 November 2011

Communiqué

Since our last meeting, global recovery has weakened, particularly inadvanced countries, leaving unemployment at unacceptable levels. In thiscontext, tensions in the financial markets have increased due mostly tosovereign risks in Europe; there are also clear signs of a slowing in growth inthe emerging markets. Commodity price swings have put growth at risk.Global imbalances persist. Today, we reaffirm our commitment to work



G20: Cannes Summittogether and we have taken decisions to reinvigorate economic growth, create jobs, ensure financialstability, promote social inclusion and make globalization serve the needs of the people.

A global strategy for growth and jobs

1. To address the immediate challenges faced by the global economy, we commit to coordinate our actions and policies. Each of us will play their part. 2. We have agreed on an Action plan for Growth andJobs to address short term vulnerabilities and strengthen medium-term foundations for growth. 3. We aredetermined to strengthen the social dimension of globalization. We firmly believe that employment andsocial inclusion must be at the heart of our actions and policies.

Towards a more stable and resilient International Monetary System

1. We have made progress in reforming the international monetary system tomake it more representative, stable and resilient. We have agreed on actionsand principles that will help reap the benefits from financial integration andincrease the resilience against volatile capital flows. This includes:

Coherent conclusions to guide us in the management of capital flows, common principles for cooperation between the IMF and Regional Financial Arrangements, and an action plan for localcurrency bond markets.

We agree that the SDR basket composition should continue to reflect the role of currencies in theglobal trading and financial system. The SDR composition assessment should be based on existingcriteria, and we ask the IMF to further clarify them. To adjust to currencies’ changing role andcharacteristics over time, the composition of the SDR basket will be reviewed in 2015, or earlier, ascurrencies meet the existing criteria to enter the basket.

We are also committed to further progress towards a more integrated, even-handed and effective IMFsurveillance and to better identify and address spill-over effects.

2. We affirm our commitment to move more rapidly toward more market-determined exchange ratesystems and enhance exchange rate flexibility to reflect underlying economic fundamentals, avoid

persistent exchange rate misalignments and refrain from competitive devaluation of currencies.

3. We agreed to continue our efforts to further strengthen global financial safety nets and we support theIMF in putting forward the new Precautionary and Liquidity Line (PLL) to provide short-term liquidity tocountries with strong policies and fundamentals facing exogenous shocks. We also support the IMF in

putting forward a single facility to fulfil the emergency assistance needs of its members.

4. We welcome the euro area's comprehensive plan and urge rapid elaboration and implementation,including of country reforms.

We will ensure the IMF continues to have resources to play itssystemic role to the benefit of its whole membership. We standready to ensure additional resources could be mobilised in a timelymanner.

Reforming the financial sector and enhancing market integrity



G20: Cannes Summit1. In Washington in 2008, we committed to ensure that all financial markets, products and participants areregulated or subject to oversight, as appropriate. We will implement our commitments and pursue thereform of the financial system.

2. We have agreed on comprehensive measures so that no financial firm can be deemed “too big to fail”and to protect taxpayers from bearing the costs of resolution. The FSB publishes today an initial list of Global systemically important financial institutions (G-SIFIs). G-SIFIs will be submitted to strengthenedsupervision, a new international standard for resolution regimes as well as, from 2016, additional capitalrequirements. We are prepared to identify systemically important non-bank financial entities.

3. We have decided to develop the regulation and oversight of shadow banking. We will develop further our regulation on market integrity and efficiency, including addressing the risks posed by high frequencytrading and dark liquidity. We have tasked IOSCO to assess the functioning of Credit Default Swapsmarkets. We have agreed on principles to protect financial services consumers.

4. We will not allow a return to pre-crisis behaviours in the financial sector and we will strictly monitor the implementation of our commitments regarding banks, OTC markets and compensation practices.

5. Building on its achievements, we have agreed to reform the FSB to improve its capacity to coordinateand monitor our financial regulation agenda. This reform includes giving it legal personality and greater financial autonomy. We thank Mr Mario Draghi for the work done and we welcome the appointment of Mr Mark Carney, Governor of the Central Bank of Canada as Chairman of the FSB, and of Mr. PhilippHildebrand, Chairman of the Swiss National Bank as Vice-Chairman.

6. We urge all jurisdictions to adhere to the international standards in the tax, prudential and AML/CFTareas. We stand ready to use our existing countermeasures if needed. In the tax area, we welcome the

progress made and we urge all the jurisdictions to take the necessary actions to tackle the deficienciesidentified in the course of the reviews by the Global Forum, in particular the 11 jurisdictions identified bythe Global Forum whose framework has failed to qualify. We underline the importance of comprehensive

tax information exchange and encourage work in the Global Forum to define the means to improve it. Wewelcome the commitment made by all of us to sign the Multilateral Convention on Mutual AdministrativeAssistance in Tax Matters and strongly encourage other jurisdictions to join this Convention.

Addressing commodity price volatility and promoting agriculture

1. As part of our financial regulation agenda, we endorse the IOSCOrecommendations to improve regulation and supervision of commodity derivatives markets. We agree that market regulatorsshould be granted effective intervention powers to prevent marketabuses. In particular, market regulators should have and use formal

position management powers, among other powers of intervention,including the power to set ex-ante position limits, as appropriate.

2. Promoting agricultural production is key to feed the world population.To that end, we decide to act in the framework of the Action Plan on FoodPrice Volatility and Agriculture agreed by our Ministers of Agriculture inJune 2011. In particular, we decide to invest in and support research anddevelopment of agriculture productivity. We have launched the“Agricultural Market Information System” (AMIS) to reinforcetransparency on agricultural products’ markets. To improve food security,



G20: Cannes Summitwe commit to develop appropriate risk-management instruments and humanitarian emergency tools. Wedecide that food purchased for non-commercial humanitarian purposes by the World Food Program willnot be subject to export restrictions or extraordinary taxes. We welcome the creation of a “RapidResponse Forum”, to improve the international community’s capacity to coordinate policies and developcommon responses in time of market crises.

Improving energy markets and pursuing the Fight against Climate Change

1. We are determined to enhance the functioning and transparency of energy markets. We commit to improve the timeliness, completenessand reliability of the JODI-oil database and to work on the JODI-gasdatabase along the same principles. We call for continued dialogueannually between producers and consumers on short medium andlong-term outlook and forecasts for oil, gas and coal. We ask relevantorganizations to make recommendations on the functioning andoversight of price reporting agencies. We reaffirm our commitment torationalise and phase-out over the medium term inefficient fossil fuelsubsidies that encourage wasteful consumption, while providing targeted support for the poorest.

2. We are committed to the success of the upcoming Durban Conference on Climate Change and supportSouth Africa as the incoming President of the Conference. We call for the implementation of the Cancunagreements and further progress in all areas of negotiation, including the operationalization of the GreenClimate Fund, as part of a balanced outcome in Durban. We discussed the IFIs report on climate financeand asked our Finance Ministers to continue work in this field, taking into account the objectives,

provisions and principles of the UNFCCC.

Avoiding protectionism and strengthening the multilateral trading system

1. At this critical time for the global economy, it is important tounderscore the merits of the multilateral trading system as a wayto avoid protectionism and not turn inward. We reaffirm our standstill commitments until the end of 2013, as agreed in

Toronto, commit to roll back any new protectionist measure thatmay have risen, including new export restrictions and WTO-inconsistent measures to stimulate exports and ask the WTO,OECD and UNCTAD to continue monitoring the situation andto report publicly on a semi-annual basis.

2. We stand by the Doha Development Agenda (DDA)mandate. However, it is clear that we will not complete the

DDA if we continue to conduct negotiations as we have in the past. We recognize the progress achievedso far. To contribute to confidence, we need to pursue in 2012 fresh, credible approaches to furthering



G20: Cannes Summitnegotiations, including the issues of concern for Least Developed Countries and, where they can bear fruit, the remaining elements of the DDA mandate. We direct our Ministers to work on such approaches atthe upcoming Ministerial meeting in Geneva and also to engage into discussions on challenges andopportunities to the multilateral trading system in a globalised economy and to report back by the MexicoSummit.

3. Furthermore, as a contribution to a more effective, rules-based trading system, we support astrengthening of the WTO, which should play a more active role in improving transparency on traderelations and policies and enhancing the functioning of the dispute settlement mechanism.

Addressing the challenges of development

1. Recognizing that economic shocks affect disproportionately themost vulnerable, we commit to ensure a more inclusive andresilient growth.

2. The humanitarian crisis in the Horn of Africa underscores theurgent need to strengthen emergency and long-term responses to

food insecurity. We support the concrete initiatives mentioned inthe Cannes final Declaration, with a view to foster investments inagriculture and mitigate the impact of price volatility, in particular in low income countries and to the benefit of smallholders.

3. Recognizing that the lack of Infrastructure dramatically hampers the growth potential in manydeveloping countries, particularly in Africa, we support recommendations of the High Level Panel and theMDBs and highlight eleven exemplary infrastructure projects and call on the MDBs, working withcountries involved, to pursue the implementation of such projects that meet the HLP criteria.

4. In order to meet the Millennium Development Goals, we stress the pivotal role of ODA. Aid

commitments made by developed countries should be met. Emerging countries will engage or continue toextend their level of support to other developing countries. We also agree that, over time, new sources of funding need to be found to address development needs and climate change.

Intensifying our Fight against Corruption

1. We have made significant progress in implementing the Action Plan oncombating corruption, promoting market integrity and supporting a clean

business environment. We underline the need for swift implementation of astrong international legislative framework, the adoption of national measures to

prevent and combat corruption and foreign bribery, the strengthening of international cooperation in fighting corruption and the development of jointinitiatives between the public and the private sector.

Reforming global governance for the 21st century

1. We welcome the report of UK Prime Minister David Cameron on globalgovernance. We agree that the G20 should remain an informal group. We



G20: Cannes Summitdecide to formalise the Troika. We will pursue consistent and effective engagement with non-members,including the UN and we welcome their contributions to our work.

2. We reaffirm that the G20’s founding spirit of bringing together the major economies on an equalfooting to catalyze action is fundamental and therefore agree to put our collective political will behind our economic and financial agenda, and the reform and more effective working of relevant internationalinstitutions. We support reforms to be implemented within the FAO and the FSB We have committed tostrengthen our multilateral trade framework. We call on international organisations, especially the UN,WTO, the ILO, the WB, the IMF and the OECD, to enhance their dialogue and cooperation, including onthe social impact of economic policies, and to intensify their coordination.

On December 1st. 2011, Mexico will start chairing the G20. We will convene in Los Cabos, Baja California, in June 2012, under the Chairmanship of Mexico. Russia will chair the G20 in 2013, Australiain 2014 and Turkey in 2015. We have also agreed, as part of our reforms to the G20, that after 2015,annual presidencies of the G20 will be chosen from rotating regional groups, starting with the Asiangrouping comprising of China, Indonesia, Japan and Korea.

We thank France for its G20 Presidency and for hosting the successful Cannes Summit.

5 INTERNATIONAL MONETARY SYSTEMCannes Summit Final Declaration

Building a More Stable and Resilient IMS


Since our last meeting:

• Global recovery has weakened, particularly in advancedcountries, leaving unemployment at unacceptable levels.

• Tensions in the financial markets have increased due mostly tosovereign risks in Europe.

• Signs of vulnerabilities are appearing in emerging markets.



G20: Cannes Summit

• Increased commodity prices have harmed growth and hit the mostvulnerable.

• Exchange rate volatility creates a risk to growth and financial stability.

• Global imbalances persist.

Today, we reaffirm our commitment to work together and we have taken decisions to reinvigorateeconomic growth, create jobs, ensure financial stability, promote social inclusion and make globalizationserve the needs of our people.

To address the immediate challenges faced by the global economy, we commit to coordinate our actionsand policies. We have agreed on an Action plan for Growth and Jobs . Each of us will play their part.

Building a More Stable and ResilientInternational Monetary System

In 2010, the G20 committed to working towards a more stableand resilient IMS and to ensure systemic stability in the globaleconomy, improve the global economic adjustment, as well asan appropriate transition towards an IMS which better reflects

the increased weight of emerging market economies. In 2011, we are taking concrete steps to achieve thesegoals.

Increasing the benefits from financial integration and resilience againstvolatile capital flows to foster growth and development

We agreed on coherent conclusions to guide us in the management of capital flows drawing on country

experiences, in order to reap the benefits from financial globalization, while preventing and managingrisks that could undermine financial stability and sustainable growth at the national and global levels.

To pursue these objectives, we adopted an action plan to support the development and deepening of localcurrency bond markets, scaling up technical assistance from different international institutions, improvingthe data base and preparing joint annual progress reports to the G20. We call on the World Bank,Regional Development Banks, IMF, UNCTAD, OECD, BIS and FSB to work together to support thedelivery of this plan and to report back by the time of our next meeting about progress made.

Reflecting the changing economic equilibrium and theemergence of new international currencies

We affirm our commitment to move more rapidly toward more market-determined exchange rate systems and enhance exchange rate flexibility toreflect underlying economic fundamentals, avoid persistent exchange ratemisalignments and refrain from competitive devaluation of currencies.

We are determined to act on our commitments to exchange rate reformarticulated in our Action plan for Growth and Jobs to address short termvulnerabilities, restore financial stability and strengthen the medium-termfoundations for growth. Our actions will help address the challenges created by developments in global



G20: Cannes Summitliquidity and capital flows volatility, thus facilitating further progress on exchange rate reforms andreducing excessive accumulation of reserves.

We agreed that the SDR basket composition should continue to reflect therole of currencies in the global trading and financial system and be adjustedover time to reflect currencies’ changing role and characteristics. The SDR composition assessment should be based on existing criteria, and we ask theIMF to further clarify them. A broader SDR basket will be an importantdeterminant of its attractiveness, and in turn influence its role as a globalreserve asset. This will serve as a reference for appropriate reforms.

We look forward to reviewing the composition of the SDR basket in 2015,and earlier if warranted, as currencies meet the criteria, and call for further analytical work of the IMF inthis regard, including on potential evolution. We will continue our work on the role of the SDR.

Strengthening our capacity to cope with crises

As a contribution to a more structured approach, we agreed to

further strengthen global financial safety nets in which nationalgovernments, central banks, regional financial arrangements andinternational financial institutions will each play a role according toand within their respective mandate. We agreed to continue theseefforts to this end.

We recognize that central banks play a major role in addressingliquidity shocks at a global and regional level, as shown by therecent improvements in regional swap lines such as in East Asia.We agreed on common principles for cooperation between the IMF and Regional FinancialArrangements, which will strengthen crisis prevention and resolution efforts.

As a contribution to this structured approach and building on existing instruments and facilities, wesupport the IMF in putting forward the new Precautionary and Liquidity Line (PLL) .This would enable the provision, on a case by case basis, of increased and moreflexible short-term liquidity to countries with strong policies and fundamentals facingexogenous, including systemic, shocks.

We also support the IMF in putting forward a singleemergency facility to provide non-concessional

financing for emergency needs such as naturaldisasters, emergency situations in fragile and post-conflict states, and also other disruptive events. We

call on the IMF to expeditiously discuss and finalize both proposals.

We welcome the euro area's comprehensive plan and urge rapid elaboration andimplementation, including of country reforms. We welcome the euro area'sdetermination to bring its full resources and entire institutional capacity to bear in restoring confidence and financial stability, and in ensuring the proper functioning of money and financial markets.



G20: Cannes Summit

We will ensure the IMF continues to have resources to play its systemic role to the benefit of its whole membership, building on the substantial resources we havealready mobilized since London in 2009.

We stand ready to ensure additional resources could be mobilised in a timelymanner and ask our finance ministers by their next meeting to work on deploying arange of various options including bilateral contributions to the IMF, SDRs, andvoluntary contributions to an IMF special structure such as an administeredaccount.

We will expeditiously implement in full the 2010 quota and governance reform of the IMF.

Strengthening IMF surveillance

We agreed that effective and strengthened IMF surveillance will be crucial to theefficiency and stability of the IMS. In this context, a strengthening of multilateral surveillance and a better integration with bilateral surveillance will

be important, as well as enhanced monitoring of interlinkages across sectors,countries and regions. Against this background, we welcome the recentimprovements to the IMF surveillance toolkit including the consolidatedmultilateral surveillance report and spillover reports and ask the IMF to continueto improve upon these exercises and methodology.

We call on the IMF to make further progress towards a more integrated, even-handed and effective IMFsurveillance, taking into account the Independent Evaluation Office report on surveillance, covering in

particular financial sector, fiscal, monetary, exchange rate policies and an enhanced analysis of their impact on external stability.

We call on the IMF to regularly monitor cross-border capital flows and their transmission channels and update capital flow management measures applied

by countries. We also call on the IMF to continue its work on drivers andmetrics of reserve accumulation taking into account country circumstances,and, along with the BIS, their work on global liquidity indicators, with a viewto future incorporation in the IMF surveillance and other monitoring

processes, on the basis of reliable indicators. We will avoid persistentexchange rate misalignments and we asked the IMF to continue to improve itsassessment of exchange rates and to publish its assessments as appropriate.

While continuing with our efforts to strengthen surveillance, we recognize theneed for better integration of bilateral and multilateral surveillance, and welook forward to IMF proposals for a new integrated decision on surveillanceearly next year.

We agreed on the need to increase the ownership and traction of IMF surveillance, which are keycomponents of its effectiveness. We agreed to ensure greater involvement of Ministers and Governors, by

providing greater strategic guidance through the IMFC. To increase the transparency of IMF surveillance,we reaffirm the importance of all IMF members to contribute to improve data availability, support the



G20: Cannes SummitManaging Director’s proposal to publish multilateral assessments of external balances, and werecommend timely publication of surveillance reports. We welcome the publication of Art. IV reports bymost members of the G20 and look forward to further progress.

Next steps

Building a more stable and resilient IMS is a long-term endeavor. We commit to continue working toensure systemic stability in the global economy and an appropriate transition towards an IMS which better reflects the increased weight of emerging market economies. In 2012, we will continue to take concretesteps in this direction.

6.1 TAX UPDATESCannes Summit Final Declaration

Tackling tax havens and non-cooperative jurisdictions

We are committed to protect our public finances andthe global financial system from the risks posed bytax havens and non cooperative jurisdictions. Thedamage caused is particularly important for the least

developed countries. Today we reviewed progress made in the three following areas:

In the tax area

- In the tax area, the Global Forum has now 105 members. More than 700 information exchangeagreements have been signed and the Global Forum is leading an extensive peer review process of thelegal framework (phase 1) and implementation of standards (phase 2). We ask the Global Forum tocomplete the first round of phase 1 reviews and substantially advance the phase 2 reviews by the end of next year. We will review progress at our next Summit. Many of the 59 jurisdictions which have beenreviewed by the Global Forum are fully or largely compliant or are making progress through theimplementation of the 379 relevant recommendations. We urge all the jurisdictions to take the necessaryaction to tackle the deficiencies identified in the course of their reviews, in particular the 11 jurisdictions



G20: Cannes Summitwhose framework does not allow them at this stage to qualify to phase 2. We underline in particular theimportance of comprehensive tax information exchange and encourage competent authorities to continuetheir work in the Global Forum to assess and better define the means to improve it. We welcome thecommitment made by all of us to sign the Multilateral Convention on Mutual Administrative Assistancein Tax Matters and strongly encourage other jurisdictions to join this Convention. In this context, we willconsider exchanging information automatically on a voluntary basis as appropriate and as provided for inthe convention;

In the prudential area

- In the prudential area, the FSB has led a process and published a statement to evaluate adherence tointernationally agreed information exchange and cooperation standards. Out of 61 jurisdictions selectedfor their importance on several economic and financial indicators, we note with satisfaction that 41

jurisdictions have already demonstrated sufficiently strong adherence to these standards and that 18 othersare committing to join them. We urge the identified non-cooperative jurisdictions to take the actionsrequested by the FSB;

In the anti-money laundering and combating the financing of terrorism area

- In the anti-money laundering and combating the financing of terrorism area, the FATF has recently published an updated list of jurisdictions with strategic deficiencies. We urge all jurisdictions and in particular those identified as not complying or making sufficient progress to strengthen their AML/CFTsystems in cooperation with the FATF.

We urge all jurisdictions to adhere to the international standards in the tax, prudential and AML/CFTareas. We stand ready, if needed, to use our existing countermeasures to deal with jurisdictions which failto meet these standards. The FATF, the Global Forum and other international organizations should work closely together to enhance transparency and facilitate cooperation between tax and law enforcementagencies in the implementation of these standards. We also call on FATF and OECD to do further work to

prevent misuse of corporate vehicles.6.2 SECURIY LAW UPDATES

Cannes Summit Final DeclarationStrengthening the FSB capacity resources and governance

The FSB has played a key role in promoting development andimplementation of regulation of thefinancial sector.

To keep pace with this growing role, weagreed to strengthen FSB’s capacity, resources and governance, building on its Chair’s proposals.

These include:

The establishment of the FSB on an enduring organizational footing: We have given the FSB a strong political mandate and need to give it a corresponding institutionalstanding, with legal personality and greater financial autonomy, while preserving the existing and well-functioning strong links with the BIS;



G20: Cannes SummitThe reconstitution of the steering committee: As we move into a phase of policy development and implementation that in many cases will requiresignificant legislative changes, we agree that the upcoming changes to the FSB steering committee shouldinclude the executive branch of governments of the G20 Chair and the larger financial systems as well asthe geographic regions and financial centers not currently represented, in a balanced manner consistentwith the FSB Charter;

The strengthening of its coordination role vis-à-vis other standard setting bodies (SSB) on policydevelopment and implementation monitoring, avoiding any functional overlaps and recognizing theindependence of the SSBs

We call for first steps to beimplemented by the end of this year and will review the implementationof the reform at our next Summit.

7 MISC. UPDATESCannes Summit Final Declaration

Protecting Marine Environment


We decide to take further action to protect the marine environment, in particular to prevent accidents related to offshore oil and gas explorationand development, as well as marine transportation, and to deal with their consequences. We welcome the establishment of a mechanism to share

best practices and information on legal frameworks, experiences in preventing and managing accidents and disasters relating to offshore oiland gas drilling, production and maritime transportation. We ask theGlobal Marine Environment Protection working group, in cooperationwith the OECD, the International Regulators Forum and OPEC, to reportnext year on progress made and to establish this mechanism in order to

disseminate these best practices by mid-2012, at which point it will be reviewed. We also commit tofoster dialogue with international organisations and relevant stakeholders



G20: Cannes Summit

Fostering Clean energy, Green Growth and Sustainable Development

We will promote low-carbon development strategies in order to optimize the potential for green growthand ensure sustainable development in our countries and beyond. We commit to encouraging effective

policies that overcome barriers to efficiency, or otherwise spur innovation and deployment of clean andefficient energy technologies. We welcome the UN Secretary General’s “Sustainable Energy for All”initiative. We support the development and deployment of clean energy and energy efficiency (C3E)technologies. We welcome the assessment of the countries’ current situation regarding the deployment of these technologies as well as the on-going exercise of sharing best practices, as a basis for better policymaking.

We are committed to the success of the United Nations Conference on Sustainable Development in Rio deJaneiro in 2012. “Rio + 20” will be an opportunity to mobilize the political will needed to reinsertsustainable development at the heart of the international agenda, as a long term solution to growth, jobcreation, poverty reduction and environment protection. A green and inclusive growth will create a broadspectrum of opportunities in new industries and in areas such as environmental services, renewableenergy and new ways to provide basic services to the poor.

Pursuing the Fight against Climate Change

We are committed to the success of the upcoming Durban Conferenceon Climate Change on 28 November - 9 December 2011. We supportSouth Africa as the incoming President of the Conference. We call for the implementation of the Cancun agreements and further progress inall areas of negotiation in Durban.

We stand ready to work towards operationalization of the Green

Climate Fund as part of a balanced outcome in Durban, building uponthe report of the Transitional Committee.

Financing the fight against climate change is one of our main priorities.In Copenhagen, developed countries have committed to the goal of

mobilizing jointly USD 100 billion per year from all sources by 2020 to assist developing countries tomitigate and adapt to the impact of climate change, in the context of meaningful mitigation actions andtransparency. We discussed the World Bank – IMF – OECD – regional development banks report onclimate finance and call for continued work taking into account the objectives, provisions and principles



G20: Cannes Summitof the UNFCCC by international financial institutions and the relevant UN organizations. We ask our Finance Ministers to report to us at our next Summit on progress made on climate finance.

We reaffirm that climate finance will come from a wide variety of sources, public and private, bilateraland multilateral, including innovative sources of finance. We recognize the role of public finance and

public policy in supporting climate-related investments in developing countries. We underline the role of the private sector in supporting climate-related investments globally, particularly through various market-

based mechanisms and also call on the MDBs to develop new and innovative financial instruments toincrease their leveraging effect on private flows.

Avoiding protectionism and reinforcing the Multilateral Trading System

At this critical time for the global economy, it is important to underscore the merits of the multilateraltrading system as a way to avoid protectionism and not turn inward. We reaffirm our standstillcommitments until the end of 2013, as agreed in Toronto, commit to roll back any new protectionistmeasure that may have risen, including new export restrictions and WTO-inconsistent measures tostimulate exports and ask the WTO, OECD and UNCTAD to continue monitoring the situation and toreport publicly on a semi-annual basis.

We stand by the Doha Development Agenda (DDA) mandate. However, it is clear that we will notcomplete the DDA if we continue to conduct negotiations as we have in the past. We recognize the

progress achieved so far. To contribute to confidence, we need to pursue in 2012 fresh, credibleapproaches to furthering negotiations, including the issues of concern for Least Developed Countries and,where they can bear fruit, the remaining elements of the DDA mandate. We direct our Ministers to work on such approaches at the upcoming Ministerial meeting in Geneva and also to engage into discussions onchallenges and opportunities to the multilateral trading system in a globalised economy and to report back

by the Mexico Summit.



G20: Cannes SummitFurthermore, as a contribution to a more effective, rules-based trading system, we support a strengtheningof the WTO, which should play a more active role in improving transparency on trade relations and

policies and enhancing the functioning of the dispute settlement mechanism.

We look forward to welcoming Russia as a WTO member by the end of the year.

8. SOCIAL SECURITY OBLIGATIONSCannes Summit Final Declaration

Development: Investing for Global Growth


1. As part of our overall objective for growth and jobs, we commit tomaximise growth potential and economic resilience in developing countries, in particular in Low-Income Countries (LICs). Development is akey element of our agenda for global recovery and investment for futuregrowth. It is also critical to creating the jobs needed to improve people’sliving standards worldwide.

Recognizing that development is a concern and duty to all G20 countries,our Ministers met for the first time on Development in Washington onSeptember 23, 2011.



G20: Cannes Summit2. We support the report of the Development Working Group, implementing the G20’s SeoulDevelopment Consensus for Shared Growth, and call for prompt implementation of our Multi-Year Action Plan.

3. We take actions to overcome the most critical bottlenecks and constraints hampering growth indeveloping countries. In this regard, we decided to focus on two priorities, food security andinfrastructure, and to address the issue of financing for development .

4. The humanitarian crisis in the Horn of Africa underscores the urgent need to strengthen emergency andlong-term responses to food insecurity. In accordance with our Multi-Year “Action Plan on Food PriceVolatility and Agriculture”, we:

- welcome the initiative of the Economic Community of Western African States (ECOWAS) to set up atargeted regional emergency humanitarian food reserve system, as a pilot project, and the “ASEAN+3”emergency rice reserve initiative;

- Urge multilateral development banks to finalise their joint action plan on water, food and agriculture and provide an update on its implementation by our next Summit;

- Support, for those involved, the implementation of the L’Aquila Food Security Initiative and other initiatives, including the Global Agriculture and Food Security Program;

- Launch a platform for tropical agriculture to enhance capacity-building and knowledge sharing toimprove agricultural production and productivity;

- Foster smallholder sensitive investments in agriculture and explore opportunities for market inclusionand empowerment of small producers in value chains;

- Support risk-management instruments, such as commodity hedging instruments, weather index insurances

and contingent financing tools, to protect the most vulnerable against excessive price volatility, including theexpansion of the Agricultural Price Risk-Management Product developed by the World Bank Group (IFC).We ask international organisations to work together to provide expertise and advice to low-income countrieson risk-management and we welcome the NEPAD initiative to integrate risk management in agricultural

policies in Africa;

- Encourage all countries to support the Principles of Responsible Agricultural Investment (PRAI) to ensuresustained investment in agriculture;

- Confirm our commitment to scaling-up nutrition through a combination of direct nutrition interventionsand the incorporation of nutrition in all relevant policies.

5. Investing in infrastructure in developing countries, especially in LICs and, whilst not exclusively, witha special emphasis on sub-Saharan Africa, will unlock new sources of growth, contribute to theachievement of the Millennium Development Goals and sustainable development. We support efforts toimprove capacities and facilitate the mobilization of resources for infrastructure projects initiated by

public and private sectors.

6. We commissioned a High Level Panel (HLP), chaired by Mr Tidjane Thiam, to identify measures toscale-up and diversify sources of financing for infrastructure and we requested the MDBs to develop a

joint action plan to address bottlenecks. We welcome both the HLP’s report and the MDB Action Plan. Inthis regard, we support the following recommendations to :



G20: Cannes Summit

- Support the development of local capacities to improve supply and quality of projects and make them bankable and enhance knowledge sharing on skills for employment in low income countries. In thisregard, we welcome the High Level Panel fellowship program and MDB’s efforts to develop andstrengthen regional public-private partnerships practitioner’s networks;

- Increase quality of information available to investors, through the establishment of online regionalmarketplace platforms to better link project sponsors and financiers, such as the “Sokoni AfricaInfrastructure Marketplace”, and the extension of the Africa Infrastructure Country Diagnosis, which aimat benchmarking infrastructure data;

- Prioritize project preparation financing, encouraging the MDBs to dedicate a greater share of their fundsto preparation facilities that can operate on a revolving basis and call on MDBs to improve effectivenessof the existing preparation facilities;

- Contribute to building an enabling environment for private and public infrastructure financing,especially for regional projects. We support increased transparency in the construction sector, the reviewof the Debt Sustainability Framework taking into account the investment-growth nexus. We call on

MDBs to harmonize their procurement rules and practices and we support move towards mutualrecognition of procedures and eligibility rules;

- Improve access to funding, notably through the strengthening of local intermediaries and financialmarkets, more effective use of MDBs capital, including through use of credit enhancement and guaranteeinstruments.

7. We commissioned the HLP to establish criteria to identify exemplary investment projects incooperation with multilateral development banks. We highlight the 11 projects mentioned in the HLPreport annexed to this Declaration, which have the potential to have a transformational regional impact byleading to increased integration and access to global markets, with due consideration to environmental

sustainability. We call on the MDBs, working with countries involved and in accordance with regional priorities (in particular the Program for Infrastructure Development in Africa), to pursue theimplementation of such projects that meet the HLP criteria and to prioritize project preparation financing,notably the NEPAD Infrastructure Projects Preparation Facility.

8. We stress the importance of following-up on these concrete actions and invite MDBs to provide regular updates on the progress achieved.

9. Recognizing that economic shocks affect disproportionately the most vulnerable, we commit to ensurea more inclusive and resilient growth. We therefore decide to support the implementation and expansionof nationally-designed social protection floors in developing countries, especially low income countries.

We will work to reduce the average cost of transferring remittances from 10% to 5% by 2014,contributing to release an additional 15 billion USD per year for recipient families.

10. Recognizing that 2.5 billion people and millions of Small and Medium Enterprises (SMEs) throughoutthe world lack access to formal financial services, and the crucial importance for developing countries toovercome this challenge, we launched in Seoul an ambitious Global Partnership for Financial Inclusion(GPFI). We commend the ongoing work by the GPFI to foster the development of SME finance and toinclude financial inclusion principles in international financial standards. We endorse the fiverecommendations put forward in its report, annexed to this Declaration, and commit to pursue our effortsunder the Mexican Presidency.



G20: Cannes Summit

11. We welcome the presentation of the report by Mr Bill Gates on financing for development. Werecognize the importance of the involvement of all actors, both public and private, and the mobilisation of domestic, external and innovative sources of finance.

12. Consistent with the Multi-Year Action Plan agreed in Seoul, we strongly support developingcountries’ mobilization of domestic resources and their effective management as the main driver for development. This includes technical assistance and capacity building for designing and efficientmanaging of tax administrations and revenue systems and greater transparency, particularly in mineraland natural resource investment. We urge multinational enterprises to improve transparency and fullcompliance with applicable tax laws. We welcome initiatives to assist developing countries, on a demand-led basis, in the drafting and implementation of their transfer pricing legislation. We encourage allcountries to join the Global Forum on Transparency and exchange of information in tax purposes.

13. We stress the pivotal role of ODA. Aid commitments made by developed countries should be met.Emerging G20 countries will engage or continue to extend their level of support to other developingcountries. We welcome the emphasis on ensuring that poor countries benefit rapidly from innovation andtechnological advances, and agree to encourage triangular partnerships to drive priority innovations

forward. We commit to raise the quality and efficiency of aid by concentrating on the highest impactinterventions and increase the focus on concrete results and overall impact on development.

14. We agree that, over time, new sources of funding need to be found to address development needs. Wediscussed a set of options for innovative financing highlighted by Mr Bill Gates, such as Advance MarketCommitments, Diaspora Bonds, taxation regime for bunker fuels, tobacco taxes, and a range of differentfinancial taxes. Some of us have implemented or are prepared to explore some of these options. Weacknowledge the initiatives in some of our countries to tax the financial sector for various purposes,including a financial transaction tax, inter alia to support development.

15. We welcome the upcoming 4th High-Level Forum on aid effectiveness to be held in Busan, Korea (29

November-1st December 2011). The Forum will be an opportunity to establish a more inclusive partnership to address development effectiveness.

16. We look forward to a successful replenishment of the Asian Development Fund and of theInternational Fund for Agriculture Development.

Intensifying our Fight against Corruption

1. Corruption is a major impediment to economic growth anddevelopment. We have made significant progress to implement theG20 Anti-Corruption Action Plan. We endorse our experts’ report,

annexed to this Declaration, which outlines the major steps taken both by individual countries and the G20 collectively, and sets outfurther actions required to ensure that G20 countries continue tomake positive progress against the Action Plan.

2. In this context:

- We welcome the ratification by India of the United NationsConvention against Corruption (UNCAC). We also welcome thedecision made by Russia to join the OECD Convention on Combating Bribery of Foreign Public Officials



G20: Cannes Summitin International Business Transactions. We commit to accelerate the ratification and implementation of UNCAC and to have a more active engagement within the OECD Working Group on Bribery on avoluntary basis. We further commend the member countries which are taking steps in the spirit of theAction Plan;

- We commend the first reviews on the implementation of UNCAC. We commit to lead by example inensuring the transparency and inclusivity of UNCAC reviews by considering the voluntary options inaccordance with the Terms of Reference of the Mechanism, notably with regards to the participation of civil society and transparency;

- We support the work of the Financial Action Task Force (FATF) to continue to identify and engagethose jurisdictions with strategic Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT)deficiencies and update and implement the FATF standards calling for transparency of cross-border wires,

beneficial ownership, customer due diligence and enhanced due diligence;

- We agree on a work program which includes a framework for asset recovery, building on the WorldBank’s Stolen Asset Recovery (StAR) Initiative, whistle-blowers’ protection, denial of entry to corruptofficials and public sector transparency, including fair and transparent public procurement, with concrete

results by the end of 2012.

3. We welcome initiatives aimed at increasing transparency in the relationship between private sector andgovernment, including voluntary participation in the Extractive Industries Transparency Initiative (EITI).We also acknowledge the steps taken by some of us to request companies in the extractive industry to

publish what they pay in countries of operation and to support the Construction Sector TransparencyInitiative (CoST).

4. We commend the enhanced engagement of the private sector to fight against corruption. We welcomethe commitments by the B20 to build on our Action Plan and urge them to take concrete action.

5. We hold ourselves accountable for our commitments and will review progress at our next Summit.

Governance

1. We welcome the report of UK Prime Minister David Cameron onglobal governance.

2. As our premier Forum for international economic cooperation,the G20 is unique in bringing together the major economies,advanced and emerging alike, to coordinate their policies andgenerate the political agreement necessary to tackle the challenges

of global economic interdependence. It is a Leader-led and informalgroup and it should remain so. The G20 is part of the overallframework of international governance.

3. We agree that, in order to strengthen its ability to build andsustain the political consensus needed to respond to challenges, theG20 must remain efficient, transparent and accountable. To achievethis, we decide to:

- Maintain our focus on the broad global economic challenges;



G20: Cannes Summit

- Bolster our ability to deliver our agenda and work program effectively. We decide to formalise theTroika, made of past, present and future Presidencies to steer the work of the G20 in consultation with itsmembers. We ask our Sherpas to develop working practices for the G20 under the Mexican Presidency;

- Pursue consistent and effective engagement with non-members, regional and international organisations,including the United Nations, and other actors, and we welcome their contribution to our work asappropriate. We also encourage engagement with civil society. We request our Sherpas to make us

proposals for the next meeting.

4. We reaffirm that the G20’s founding spirit of bringing together the major economies on an equalfooting to catalyse action is fundamental and therefore agree to put our collective political will behind our economic and financial agenda, and the reform and more effective working of relevant internationalinstitutions.

5. On December 1st. 2011, Mexico will start chairing the G20. We will convene in Los Cabos, BajaCalifornia, in June 2012, under the Chairmanship of Mexico. Russia will chair the G20 in 2013, Australiain 2014 and Turkey in 2015. We have also agreed, as part of our reforms to the G20, that after 2015,

annual presidencies of the G20 will be chosen from rotating regional groups, starting with the Asiangrouping comprising of China, Indonesia, Japan and Korea. Details of the regional groups are attached.

6. We thank France for its G20 Presidency and for hosting the successful Cannes Summit

9. KNOWLEDGE RESOURCEKey outcomes of G20 Cannes summit

Following are the main achievements of the Group of 20 heads of state summit in Cannes, France, on November 3-4.

* IMF/EU Supervision of Italy Economic Reforms

Italy agreed to have the International Monetary Fund monitor its progress on a quarterly basis. The IMF said a team would go to Italy byend-November and said the conclusions of its regular and independentmonitoring of Italy would be published.

* IMF Resources

Broad agreement to ramp up the IMF's warchest to help stop euro zonecontagion plunging the world back into recession: No numbers were fixed, butcountries such as Britain, China and Australia said they were ready to inject newfunds into the IMF, either through bigger quotas or through additional moneyfor the IMF's New Agreements to Borrow (NAB) crisis fund. The NAB has to



G20: Cannes Summit be reauthorized every six months by the IMF executive board, the last time being in September. IMF chief Christine Lagarde said there would be no cap or floor on new resources.

Separately, there are discussions about boosting global liquidity by allocating IMF Special DrawingRights to every member country, which boost their national reserves, as was done in 2009. Furthermore,euro zone members are discussing possibly pooling their SDRs to build a fighting fund that could supportvulnerable peripherals such as Italy and Spain.

* Foreign Exchange Policy

Agreement to move "more rapidly" toward market-determined exchange ratesystems and enhance forex flexibility to reflect underlying fundamentals andavoid competitive devaluations: The final communique mentions China by name for the first time in the context of greater currency flexibility and said it"welcomed China's determination" to increase forex flexibility.

* Capital Controls

Agreement on guidance for the management of capital flows with the aimof preventing and controlling risks that could undermine financialstability and sustainable growth.

An action plan supports developing local currency bond markets, scalingup technical assistance from international institutions, improving data

bases and preparing progress reports to the G20.

* Action Plan for Jobs, Growth

Under a package to reinvigorate growth and employment, the United Statescommits to timely near-term measures to sustain economic recovery.

Australia, Brazil, Canada, China, Germany South Korea and Indonesia agreeto let automatic fiscal stabilizers work and support domestic demand.Emerging economies that are in surplus pledge to move toward domestic-led growth. Italy pledges to bring its budget "close to balance" in 2013.

* Financial Regulation

Agreement to strengthen regulation and oversight of the shadow bankingsystem, endorse the Financial Stability Board's initial 11 recommendations anddevelop them in 2012. Commitment to implement IOSCO measures to addressrisks posed by high-frequency trading and so-called "dark liquidity." Requestto IOSCO to assess by the G20's next summit the functioning of credit defaultswap markets and their role in asset pricing.

* Banks



G20: Cannes Summit

The G20 named 29 banks as being so important to the global financial system that they are likely toneed to hold more capital than rivals and must put in place a plan to let them be wound up withouttaxpayer help were they to hit trouble. Of the list of so-called SIFIs, 17 are from Europe, eight areU.S. banks, including Goldman Sachs, JP Morgan and Citigroup, and four are from Asia, includingBank of China.

* Effort to Curb Commodity Price Volatility

Agreement to boost agricultural output and tackle food price volatility tomeet growing demand from a world population expected to reach 9

billion people by 2050. France won backing for its proposal to limitcommodity futures positions of big investors as a way to crack down onspeculation. France had also sought tighter regulation of physicalcommodity trading.

* Tax on Financial Transactions

No agreement on the creation of a global tax on financial transactions,although France will now push the idea of a pan- European tax via theEuropean Commission. Opposition to the idea remains widespread although theUnited States would not stand in the way of a European tax and Brazil would not

block any push for a global tax.

* Tax Havens

Agreement to a multilateral convention to tackle tax evasion more effectively that includes automatic exchange of information and tax collection assistance.The convention also imposes safeguards to protect confidentiality of information.

* SDR Agreement that the IMF's SDR basket composition should beadjusted over time to reflect the changing nature of currencies, with areview of the basket set for 2015 and a request made to the IMF tofurther clarify current entry criteria.

* International Monetary System



G20: Cannes Summit

No tangible progress on a long-term G20 goal to work toward a more stable and resilient IMF that would better reflect the increased weight of emerging markets, but the group affirmed a will to takeconcrete steps on this front.

Without Any Concrete Plans on the Table, The Cannes Summit is beimg Termed as a Failure –

Making the Possibility of a Second Recession More Real ThanEver Before

www.mi7safe.org



G20: Cannes Summit

Alka Agarwal

Alka AgrawalManaging Trustee Mi7

Financial Literacy MissionA crash course of financial literacy

Missions Seven Charitable Trust120/714, Lajpat Nagar, Kanpur - 208005

Phone 0512-2295545, 9450156303, 9336114780

E-mail at : [email protected]

Financial Advisor Practice Journal – November 2011Volume 66 … G20: Cannes Summit

Co-Editor: Ankur Agrawal

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Documents

Vol 66 G20 Cannes Summity - Contagion - 4