International Coordination, Crisis Exit and the G20

Bruno CABRILLAC * Deputy General Manager, Statistics, Research, and International Division, Banque de France. Contact: bruno.cabrillac@banque-france.fr.

Pierre JAILLET * Researcher Fellow, Iris et Institut Jacques Delors; Former Director General, Economics and International Affairs, Banque de France (French central bank). Contact : p.h.jaillet@gmail.com.

The G20 has played a key role in the international coordination of economic policies during the first phases of the crisis. On one hand, the magnitude of the crisis has aligned the preferences of the main economies and on the other hand, the international community has quickly found a relevant forum of cooperation: the G20 whose way of functioning by consensus, inclusion of the main emerging economies and the highest level of representation made it suited to the stakes.

For crisis exit as in normal times, the background of international cooperation is less favorable, as the structural differences inside the G20 generate automatically a misalignment of preferences. In addition, as a legacy of the crisis, the room of maneuver of budgetary policies is also very different.

However, this embryo of international coordination generated by the crisis could survive as (1) there is a demand by the markets and also the people, (2) the holistic approach of the G20, combining macroeconomic coordination, strengthening of the international monetary system and financial regulation reform can facilitate global compromises and (3) the formalization of the coordination within the G20 (“Framework for growth”).