New regulations agreed, says Obama

Obama at G20 Summit

Speaking at the end of the two-day G20 summit in Pittsburgh on Friday, US President Barack Obama revealed the world's leading nations have now agreed "tough new regulations" to prevent another global financial crisis.

Obama's words, given at a press conference to close the two-day event, announced that leaders were now taking a "bold and concerted effort to forge a new framework for strong, sustainable and balanced growth."

He revealed that new regulations had now been agreed on to ensure the "reckless few" are no longer able to put the global financial system at risk. The new regulations will also relate to the amount of money banks have to hold in reserve and to excessive pay for bankers, said Obama.

Speaking exclusively about bankers' pay, Obama stressed that the G20 leaders had agreed rules to ensure that executive pay would be linked to long term financial performance and would now longer feed on short term risk-taking and greed - incidences that many have criticised as being a major contributor to the financial crisis.

However, despite agreements on several parts of the new regulations, leaders failed to agree on specific rules on the capital reserves banks need to hold; the leaders also fell short of reaching an agreement pertaining to proposed "caps" on bonuses - instead agreeing that bonus payments should not be guaranteed for many years, should be deferred in part, and should not exceed a percentage of the bank's revenue.

Lastly, global leaders also announced a deal to shift the balance of voting in the International Monetary Fund (IMF) towards growing nations such as China, with plans that the G20 will effectively now replace the G8 group of developed economies.

28/09/09

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