12th February 2015

Turkey takes on “ambitious” G20 agenda

Written by Adam Cull, the BBA’s Senior Director (Financial Policy and Operations)

This week’s G20 meetings are the first major set piece of the Turkish G20 Presidency. Unlike most other global groups, there is no standing secretariat for the G20. This gives the Presidency country great flexibility over the agenda. The Turkish Government plans to focus on three “Is:” implementation, investment and inclusivity.

Nevertheless, in many ways Turkey plans to pick up where Australia left off. On the financial regulation front, this means consolidating the agreements made and encouraging peers to implement commitments. Both Financial Stability Board Chairman Mark Carney and Secretary General Svein Andresen have been in Istanbul. They have identified the conclusion of work on Total Loss Absorbing Capital and settling problems with the implementation of reforms to bring transparency to derivative markets as priorities.

They also want to monitor the reforms agreed so far – both in terms of unintended impact and whether countries are following through their commitments. On the former, Dr Carney noted the need to be aware of the risk that reforms could make business in some jurisdictions or with certain types of client uneconomic. He announced that the FSB was exploring whether banks could be helped to know their customer’s customer for anti-money laundering purposes by leveraging the new Legal Entity Identifier system.

The monitoring of implementation also calls for “brutal truth telling” from the FSB to call out where countries are failing to follow through on implementation. Expect repeats of the recent spat between the FSB and European authorities over the details of EU compliance with Basel III.

The interaction of conduct and culture with financial stability also looks to be a priority. Dr Carney noted the need to consider the holistic incentive framework for firms and placed particular emphasis on conduct in fixed income markets and the link to the UK’s Fair and Effective Markets Review.

The other two Is are equally important for Turkey. On the investment front, the Prime Minister is keen to push forward the infrastructure hub agreed in Brisbane. This will match investors to shovel-ready projects in emerging economies. Also expect some type of agreement to monitor progress towards the G20 target of finding an additional 2% growth over the next five years.

The Presidency is looking at what can be done to support SMEs from both an investment and inclusiveness perspective. This is a particular focus for the ‘B20’ which runs alongside the G20 to provide recommendations from the business community. Much of the work looks set to mirror that coordinated via the BBA to support small businesses in the UK.

All in all it’s a realistic but also ambitious agenda. There’s much to get done before Turkey hands over to China after the November Leader’s summit.

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