G20 countries to tame debt at their own pace

Sat Jun 26, 2010 7:22pm EDT
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By Jan Strupczewski and Simon Rabinovitch

TORONTO (Reuters) - World leaders moved away on Saturday from lockstep policy pledges to secure economic recovery, leaving countries leeway to chart their own courses in taming government debt and clamping down on banks to prevent another financial crisis.

The Group of 20 leaders of the world's richest and emerging nations, holding a two-day summit in Toronto, neared agreement on broad principles to halve their budget deficits within three years and toughen bank capital requirements, according to a draft communique obtained by Reuters.

But they are leaving room for each country to choose its own timetable.

China conceded that its yuan currency was a valid topic of discussion here, reversing its earlier opposition, as the G20 tries to make good on a promise to iron out imbalances between export-rich countries, such as China, and indebted consumer nations including the United States.

The shift toward tailor-made solutions -- seen in the approach to budget deficits, bank reform and trade -- contrasts with the last three G20 summits where they linked arms to combat the worst global recession in decades.

The draft document shows countries will be given a choice whether to levy taxes on banks to recoup bailout costs -- Europe had pushed for a global tax -- and can phase in stricter bank capital rules to fit national needs.

On trade, the draft ditches mention of the Doha round of world trade talks, proposing instead regional or bilateral deals.

A synchronized world recession has given way to a three-speed recovery, with Asia's growth roaring ahead while the U.S. recovery plods along and Europe lags behind, making it harder for the G20 to agree on a one-size-fits-all approach.   Continued...

<p>A police car set on fire by anarchist demonstrators burns in the midst of protests on the streets of Toronto during the G20 summit June 26, 2010. REUTERS/Saul Porto</p>