What G-20 Accomplished, and Didn't

Global financial leaders come away from Toronto vowing to cut deficits

The G-20, an international group composed of top economic officials from 20 of the world's most important economies, met in Toronto this weekend. Here's what they accomplished, what they didn't accomplish, and what it will mean.

• World to Cut Deficits, Slow Spending The Wall Street Journal's Bob Davis reports, "The wealthiest of the Group of 20 countries said they would halve their government deficits by the year 2013 and "stabilize" their debt loads by 2016, a signal to international markets and domestic political audiences they are taking seriously the need to wean themselves from stimulus spending. ... With each side pushing, the U.S., and Europe cut what a U.S. official called a 'combo deal.' The U.S. agreed to make the goal of halving deficits a G-20 initiative, in exchange for G-20 support for language making growth the top priority, said a European official. President Barack Obama has already made similar deficit commitments back at home."

• It's Now All About China, Germany The Council of Foreign Relation's Sebastian Mallaby explains, "if this statement means anything, it must be that China and Germany, the two big economies with excess savings, need to contribute to global recovery via continued stimulus. China, admittedly, is doing its part. It has cut its trade surplus sharply, and has begun to show some willingness to allow its currency to rise. But Germany is a different story. Going into the summit, Chancellor Angela Merkel was the chief advocate of budget retrenchment--even though Germany's contribution to a balanced global recovery should be to run large deficits so long as global growth looks tentative."

• Failure to Produce Meaningful Consensus The Financial Times' Mohamed El-Arian sighs, "The outcome of the G20 is a confirmation of what many expected and feared-namely, and in sharp contrast to the April 2009 G20 London Summit, an inability to reconcile divergent views of the world. ... The communique illustrates the extent to which we now live in a multi-polar world with no dominant economic party and with excessively weak multilateral coordination mechanisms. The result is what game theorists label a 'non-cooperative game,' with a very high likelihood of sub-optimal outcomes."

• ...Which Could Mean Disaster Reuters' Felix Salmon frets, "In English, the U.S. is going to stay on its borrow-and-spend course, while Europe sees huge fiscal cuts. That, we could do without the G20. And it guarantees that the global imbalances the G8 and G20 have been so worried about since long before the financial crisis are going to get worse rather than better. There's no solution in sight, which almost guarantees that the world is going to see another crisis, this time surrounding U.S. interest rates and the dollar rather than credit. The only question is when."

• Global Bank Regulations, But Not For Years The New York Times' Sewell Chan and Jackie Calmes write, "Giant banks, while bracing for a wave of tougher regulation in Washington, will not have to face a new set of global rules on capital and liquidity anytime soon. The world's biggest economies have been developing rules that would require banks to hold more capital and be better equipped to absorb losses when financial conditions sour. But it became clear on Sunday at the meeting of the Group of 20 countries that it could be years before they take effect."