The global economy is more interconnected than ever. Trade and financial linkages have grown enormously over the last decades while technological innovations have changed dramatically the way in which we communicate. But economic and geopolitical risks as well as policy uncertainty are testing our capacity to deploy global solutions to our shared challenges.
The G20 can play an important role in steering our agenda. Just look at the world a decade ago. We suffered a global crisis, and the G20 countries came together with solutions that met this challenge. Governments propped up demand with large fiscal stimulus. Central banks slashed policy rates and implemented unconventional monetary policy.
The International Monetary Fund (IMF) also rose to the challenge of the global crisis and helped secure the global economic and financial system, with lending commitments of more than $500 billion since then. We engaged in a serious rethinking of our macroeconomic knowledge and overhauled our surveillance and policy tools to ensure faster and more flexible responses.
I believe that strong cooperation between the G20 and the IMF was essential to preventing a global depression, and strong cooperation is equally critical today. The G20 matters to the IMF as it includes many of our largest shareholders that have helped forge agreements at the level of political leaders on difficult items – for example, the 2010 quota reform. In turn, due to its unique expertise and global experience, the IMF helps advance G20 discussions and contributes to policy solutions and implementation through its universal membership.
I would like to highlight some examples of how our cooperation is helping our membership.
First, the G20 has asked us to come together with the World Bank to help enhance debt transparency. Public debt has risen markedly in recent years, particularly in low-income developing countries, of which 40% are at high risk of, or are already in, debt distress. Together with the World Bank, we are now implementing a multipronged approach. We support borrower countries’ capacity-building in debt recording and the collection and dissemination of debt data and have strengthened our debt sustainability assessments. Our future work will look into official and private-sector creditor initiatives to support sustainable borrowing and lending practices, which are critical for maintaining a healthy economy.
Second, the IMF has worked with the G20 and others to study the impact of technology on jobs. We all understand that the diffusion of new technologies could bring unprecedented growth, but also disruption. We have prepared two notes on the future of work. The first note showed that policies can transform the impact of technological change. The second note proposes a framework for policy recommendations to facilitate change. Well-designed policies such as higher education spending can both foster the adoption of new technologies that improve productivity and ensure that income gains are more broadly shared, including by facilitating female labour force participation. Here again, international cooperation can amplify the effectiveness of members’ individual efforts.
There are evolving topics that could benefit from cooperation between the G20 and the IMF. One of those is fintech. Financial technology is a field that holds the potential to deepen financial development and inclusion and enhance efficiency. But it may pose risks to financial and macroeconomic stability as well as to consumers and investors. National authorities are keen to harness the benefits and mitigate possible risks.
Together with the World Bank and other international institutions, we have developed the Bali Fintech Agenda, announced during the recent annual meetings in Indonesia. The agenda is a blueprint for policymakers who are seeking to manage new risks, while harnessing fintech potential for the benefit of all – not just the wealthy or the well connected. The agenda will help guide the IMF and World Bank staff in their work on fintech issues within their expertise and mandate and inform their dialogue with international standard setters and national authorities.
These examples show how the IMF and the G20 have fostered international cooperation to help economies achieve stronger and more sustainable growth and be more effective in delivering for people. Collective action led by the G20 has worked effectively in the past and I am confident that it will continue to work.
There is an expression: to go fast, go alone; to go far, go together. The global economy can go far when it goes together. It is more stable and more secure when its members are united in common purpose.