since the end of the Cold War. Three years after the institution's founding, it makes

sense to take a look at where it's been, and where it might be going. Hi. I'm Stewart Patrick,

and on this installment of The Internationalist, we'll be looking at five things you need to

know about the Group of Twenty.

The first thing you need to know is that the Group of Twenty has actually been around for

a while. In the wake of the Asian financial crisis in the late 1990s, Treasury Secretary

Larry Summers decided it would make sense to group together finance ministers and central

bank governors of the world's twenty most important economies. Now, this operated at

a pretty low level, though, for quite some time, out of the public gaze. But then in

November of 2008 in the depths of the global financial crisis, President George W. Bush

called the world leaders together to Washington in an extraordinary summit to try to save

the world from depression, and they succeeded. Over the course of several summits, they injected

huge quantities of liquidity into the global system, and prevented a meltdown that many

were expecting and avoided another great depression.

The second thing you need to know about the Group of Twenty is that things have gotten

a lot more complicated now that global economic stability has been restored, and national

interests are now beginning to reassert themselves. So you've got countries moving in different

directions. One of the major controversies that we face is the question of how to restore

some balance in the global economy and to deal with what have become structural imbalances.

Now the most important of these is the imbalance between countries that save too much, and

therefore build up huge currency reserves, and those countries that save too little,

and therefore build up huge debt. In the first category you have countries like China in

particular but also Germany; in the second category, the United States stands out as

Exhibit A. The question is: how should you apportion the burden of adjustment to get

things more equal?

The third thing that you really need to know is what the G20 has done is try to push reform

in other institutions to try to get them to reflect the world as it exists as opposed

to the world of 1945 when those institutions were created. One of the big things that the

United States has been pushing, and rather successfully, has been to change the governance

arrangements and the weighted voting in the International Monetary Fund to reflect the

rise of new countries like China, India, Saudi Arabia, and others. A lot of that has to come

at the expense of the Europeans, whose chairs on the executive board of that institution

and also whose voting weights or quotas have to go down. So it's been tremendously controversial

but there has been major progress made. Another point of progress has been in financial regulation.

Now, it can become incredible difficult to try to harmonize financial regulations across

the G20 countries, because of course they have twenty different banking systems but

nevertheless, there have been some major strides in trying to monitor and regulate the most

systemically important financial institutions, that is, those banks that are too big to fail.

And finally, the G20 has done a great job in fighting protectionism, which a lot of

people thought was going to break out in a rampant fashion at the height of the global

financial crisis. In fact, we've seen very little increases in discrimination whether

in tariffs or non-tariff barriers, and that's something we can all be thankful for.

The fourth issue is something people don't really know much about, but it's the fact

that the G20 has really empowered the International Monetary Fund. Now, before the financial crisis,

people had basically given up the fund for dead because it didn't seem relevant to the

major economic problems that the world faced. But in the wake of the financial crisis, suddenly

it's been given new life. Its coffers have been replenished by the G20 so that is actually

has a bigger warchest to work with when countries get into trouble, and it's actually been given

some authority to act as a watchdog, not only over other countries, but over the G20 members

themselves. This remains controversial. Countries like China really worry about this being an

infringement on their sovereignty but the fact that the G20 has allowed the IMF to monitor

the behavior of its own members and act in a surveillance fashion is really a reflection

that we just can't take for granted that countries will do what they say that they're going to

do. The global financial system is too fragile to operate without a watchdog.

Now, the final and biggest point that you need to know is that there's a big, big issue

about what the scope of the G20 should be going forward. Should it stick to its knitting,

which is something most G20 leaders want it to do, and avoid the sort of mission creep

that has affected the G7 and G8 before, or should it gradually expand the scope of its

activities? Now, I'm placing my bets on the fact that when you get twenty world leaders

into a room together, it's almost impossible to limit the agenda. I think it's inevitable

that as the G20 proceeds, that it's going to start taking on issues of climate change,

of high politics such as issues like the Arab Spring, nuclear non-proliferation, counter-terrorism,

you name it, because it's just going to be an irresistible format for leaders. What do

you think? Are you willing to take my wager? And if you do believe that it's going to expand

its agenda, what sort of issues do you think the G20 should take on? Should it, for instance,

take on the issue of Iran and its nuclear ambitions? We'd love to hear what you have

to think about these things. So please weigh in on The Internationalist blog on CFR.org.