The G20 Finance Ministers and Central Bank Governors leaders met in Washington this week to discuss international finance reform and risks facing the global economic and financial system. Among those risks, of course, is the ongoing partial shutdown of the U.S. government, the increasingly dubious political environment, and the looming debt ceiling.
U.S. Treasury Secretary Jack Lew and Federal Reserve Chair Ben Bernanke were among those attending a dinner with other finance officials on Thursday and tried to play down fears that the U.S. would default. Leaders of the Republican party did meet with President Barack Obama last night to discuss a possible deal, but it’s unclear if any real progress was made.
Anton Siluanov, Russia’s finance minister, told reporters that, “Colleagues from the U.S. Treasury and the Federal Reserve have said that they hope to solve the issue soon. They said that the problem will be solved by the 17th.”
The G20 is a group of top financial officials and central banks from 20 of the largest economies on the planet (the European Union counts as one). Collectively, member nations of the G20 account for nearly 90 percent of global GDP, 80 percent of international trade, and 66 percent of the world’s population.
Although the G20 organization itself has little power, its members pretty much hold the strings of the global economy. The G20 provides a forum for them to meet, exchange ideas, and hopefully work toward a consensus on how to deal with pressing issues.
The group is expected to release a brief communique on Friday afternoon highlighting the group’s thoughts about the global financial situation. Firm language from the G20 could actually help calm markets despite the uncertain fiscal situation in the U.S., because unity among the world’s most powerful finance officials and central bankers is generally a good think for financial markets. It is likely that they all agree that the U.S. should act in order to raise or suspend the debt ceiling, and that message could help urge lawmakers to act.
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