G20 nations back central bank independence

Observer

5 days ago

G20 nations said on Friday the independence of central banks was crucial to achieving price stability in the face of geopolitical and trade tensions.
"Central banks are strongly committed to ensuring price stability, consistent with their respective mandates and will continue to adjust their policies in a data-dependent manner", the grouping said in a joint declaration after finance ministers' meeting in South Africa, which holds the rotating presidency of the bloc.
The G20, which emerged as a forum for cooperation to combat the 2008 global financial crisis, failed to reach a joint stance when finance ministers and central bankers met in February, to the dismay of hosts South Africa.
An agreement now in the coastal city of Durban would be considered an achievement even though G20 communiques are non-binding and the precise wording is unclear.
"I don't think it's a secret. It hasn't been issued yet, but there's going to be a communique", Raymond Gilpin, chief of strategy, analysis and research at the United Nations Development Programme Africa, said on Friday.
Canadian Finance Minister Francois-Philippe Champagne said he was cautiously optimistic the meeting would result in a final communique. An official of another G20 country, who requested not to be identified, expressed similar optimism.
"We have to see the final text, but I think it's important that we reached a communique and common language. That's an improvement from the last G20", Dutch Finance Minister Eelco Heinen said.
South Africa, under its presidency's motto "Solidarity, Equality, Sustainability", has aimed to promote an African agenda, with topics including the high cost of capital and funding for climate change action.
Delegates at the meeting sought to agree lines on global economic challenges, including the uncertainty created by trade tensions, as well as wording on climate finance.
Some officials said that the language in the agreement could stress the benefits of free trade and not label tariffs as bad and reference extreme weather events to avoid terms like climate change.
Two delegates said the challenge was establishing what language Washington would accept, a task made harder by the absence of US Treasury Secretary Scott Bessent from the two-day meeting.
Bessent skipped February's Cape Town gathering as well, which several officials from China, Japan and Canada also did not attend, even though Washington is due to assume the G20 rotating presidency in December.
Bessent's absence was not ideal, but the US had been engaging in discussions on trade, the global economy and climate language, said a G20 delegate, who asked not to be named.
Finance ministers from Brazil, China, India, France and Russia also missed the durban meeting, though South Africa's Central Bank Governor Lesetja Kganyago said what mattered was that all G20 countries were represented.
The meeting is taking place under the shadow of Trump's tariff policies which have torn up the global trade rule book and clouded the economic outlook.
German Finance Minister Lars Klingbeil said he made clear to his counterparts from the Group of Seven major economies on Friday that the global trade conflict must be ended quickly. The G7 discussions were on the sidelines of the G20 meeting.
"What I take home from this is that I hear a lot of countries advocating for free trade and the importance of free trade. It's under pressure right now. It's not good for the world", the Dutch finance minister said. — Reuters