Pittsburgh Summit 2009 Leaders' Statement

Take a look at the Leaders' Statement of the 2009 Pittsburgh G20 Summit

We often hear rhetoric from world leaders about change and improving the world, but this statement is unique because of the backdrop of the global financial crisis. Other bloggers have already picked the statement apart, so I just wanted to point out three interesting things:

1) Recital 19 of the Preamble states that the G20 forum will now serve as the primary forum for international financial cooperation. This has major implications, as it gives new voice to developing nations, especially China, India, Brazil, and Mexico.

2) Recital 5 of the Preamble makes the claim regarding the efforts of various nations to inject capital into their financial systems in order to stay the tide of financial collapse: "It worked". Very interesting. Very bold claim. All I can say to that is, I sure hope so!

3) The most interesting thing to me in all of this was the encouragement of large financial firms to put in place contingency and resolution plans (found under the last bullet point under Recital 13):

"Addressing cross-border resolutions and systemically important financial institutions by end-2010: Systemically important financial firms should develop internationally-consistent firm-specific contingency and resolution plans. Our authorities should establish crisis management groups for the major cross-border firms and a legal framework for crisis intervention as well as improve information sharing in times of stress. We should develop resolution tools and frameworks for the effective resolution of financial groups to help mitigate the disruption of financial institution failures and reduce moral hazard in the future. Our prudential standards for systemically important institutions should be commensurate with the costs of their failure. The FSB should propose by the end of October 2010 possible measures including more intensive supervision and specific additional capital, liquidity, and other prudential requirements."

It is always important for international financial firms to have in place contingency and resolution plans. It will be interesting to see how this requirement plays out in the international bankruptcy sector. Europe and the U.S. have made major steps toward harmonizing international bankruptcy regulations with Chapter 15 of the U.S. Bankruptcy Code and EC Regulation 1346/2000 on cross-border insolvency.

However, international bankruptcy is still fraught with pitfalls for businesses. Perhaps this statement will give impetus to the drive to further harmonize bankruptcy regulations.