6 Sep 2009

G20 pledges banking changes, but no bonus cap

8:54 am on 6 September 2009

Finance ministers from the world's leading economies have agreed on measures to regulate the world's banking systems, but failed to come to precise plans to rein in bankers' huge bonuses.

The G20 ministers broadly agreed that banks ought to hold more capital as a cushion against the sort of catastrophic losses that led to bank failures and bailouts.

However the ministers did not agree to set a mandatory cap on bonuses, saying only they would ask the Financial Stability Board to examine possible approaches for limiting payments.

That was seen as a compromise between France and Germany, which had pushed hard for pay limits, and Britain, the United States and Canada, which opposed the measure.

The Financial Stability Board will report back to the summit of G20 leaders in Pittsburgh, Pennsylvania later this month.

Although the global economy looks brighter than when the G20 finance ministers and central bankers met in April, their closing statement said they would not remove economic stimulus until the recovery was well secured.

The G20 said there should be some coordination on removing emergency supports, to avoid adverse international fallout.