G20: Cannes Summit Volume 66 / November 2011

FINANCIAL ADVISOR
PRACTICE JOURNAL
JOURNAL OF THE SECURITIES ACADEMY AND FACULTY OF e-EDUCATION

SAFE UPDATES KEEP INFORMED

The Securities Academy and Faculty of e-Education

G20: Cannes Summit

Editor: CA Lalit Mohan Agrawal

INDEX
Month: Title: Editor : November 2011 Contagion 4: G-20 Cannes Summit CA Lalit Mohan Agarwal

66th Financial Advisor Practice Journal

S.N o.
1.1 1.2

Section Name
Editorial Preamble: Stock Markets

Topic Will G-20 walk the talk? The Coming Global Credit Glut Markets decline as global bourses weigh Sensex ends in red for second consecutive week Implementing and deepening Financial sector reforms PM Singhs statement ahead of Cannes G20 Summit G20 summit: A Greek tragedy and a grand failure No Crowning Glory for Sarkozy at Cannes Summit Addressing Food Price Volatility Improving the functioning of Energy Markets Welcome from the French G20 Presidency The Cannes Action Plan for Growth and Jobs Addressing Short-term Vulnerabilities and Restoring Financial Stability Strengthening the Medium-term Foundation for Growth Contd/ Strengthening the Medium term . Communiqu Building a More Stable and Resilient IMS Tackling tax havens and noncooperative jurisdictions Strengthening the FSB capacity and governance

1st Week of November: Sensex down 242 points 2nd Week of November: Sensex down 370 points
1.3 Financial Sector

2.1 2.2 2.3

Indian Economy International Warning Signals

3.1 3.2

Commodity Market Energy Market

4 4.1 4.2 4.3 4.4 4.5 5 6.1 6.2

Financial Sector Transforming Tomorrow Financial Advisors Financial Planners Risk Management Consultants Credit Counsellors Issues Of The Present International Monetary System (IMS) Tax updates Security Law Updates

Miscellaneous Updates

G20: Cannes Summit - Protecting Marine Environment - Fostering Clean energy, Green Growth and Sustainable Development - Pursuing the Fight against Climate Change - Avoiding protectionism and Reinforcing Multilateral Trading System - Development: Investing for Global Growth - Intensifying our Fight against Corruption - Governance Key outcomes of G20 Cannes Summit
Words From The Managing Trustee

Social Security Obligations

Knowledge Resource

Without Any Concrete Plans On the table, The Cannes Summit is being Termed as a Failure Making the Possibility of a Second Recession More Real Than Ever Before Editorial preamble 1.1 CANNES SUMMIT Will G-20 walk the talk? In the week ahead of the just-concluded meetings of the Group of Twenty (G-20) nations at Cannes, two events unfolded. First, Japan intervened in the currency market to shore up the yen, taking financial markets by surprise. Second, even more unexpectedly, Greek Prime Minister George Papandreou announced that he would be seeking a referendum on the bailout package approved for Greece, which required the implementation of politically difficult austerity measures. It couldnt have augured worse for the host country President Nicolas Sarkozy. While one demonstrated disdain for global coordination, the latter was a virtual rejection of the bailout plan hammered together by Sarkozy and German Chancellor Angela Merkel. It also put the onus back on Europe, when it was hoping to use the Cannes summit to look beyond the immediate objective of firefighting a crisis, which if unchecked could rapidly deteriorate into a global contagion of devastating proportion. Naturally, the two-day summit focused almost entirely on salvaging the situation forced upon the world by Greek Prime Minister Papandreou. While officially everybody was silent in fact, the official communiqu almost ignores Greece, excepting for a passing reference there is no doubt that Sarkozy and Merkel, backed by an unusually subdued US, eventually restored the status quo by forcing Papandreou to drop the referendum. However, it came at a price. The political economy of Papandreous action is that it exposed the structural flaws and more importantly, it forced a discussion on the fact that Europe is a monetary union, but not a fiscal one of the European Union, and also revealed how the world is poised on a knifes edge, especially if we throw in the globalisation of discontent against growing inequalities, both within and among nations, and joblessness.

G20: Cannes Summit So the big question to ask is whether the G-20 summit addressed these concerns: the short-term crisis that is still hanging over Europe and consequently the whole world, and a long-term view on fixing growing inequality. The answer, going by cues dropped by some of the global leaders, as always at the end of such summits is a vague yes. But then, talk is cheap: the big question is whether the global leaders, several of whom are up for re-election, are willing to walk the talk. To address the structural issue of inequality, it is clear that the G-20 is looking to do so by putting in place a growth process that will generate more jobs. And this in turn has been presaged on a rebalancing of global economic growth euphemism for getting China and Germany to underwrite the bad times. Interestingly, the action plan for growth and jobs finalised at the end of the G-20 summit has managed to get the Chinese to make such a specific commitment. It is a big step forward as it signals Chinas willingness to shoulder multilateral commitments. According to the action plan, China has committed to rebalance demand toward domestic consumption, promote a market-based interest rate reform, and move further toward capital account convertibility. As far as the financial markets are concerned, the G-20 summit, despite being sandbagged by Greece, has managed to come out making all the positive noises. The issue is whether the jittery markets have the courage to ask the obvious question: is this all talk, or will there be follow through action? Because, while confidence-building measures are important in shoring up confidence, the failure to follow up with concrete action, most of which is politically difficult to achieve, only means kicking the can further down the street; the only difference is that this time the day of reckoning may be weeks and not months away. 1.2 STOCK MARKETS The Coming Global Credit Glut With world leaders meeting at the G-20 summit in Cannes, France, the next economic minefield that they will face is already coming into view. It is likely to take the form of an opaque global credit glut, turbocharged by the fragile mixture of too-big-to-fail global banking with a huge and largely unwatched and unregulated shadow banking sector. We urgently need to understand the role of shadow banking and too-big-to-fail banks in creating a global credit glut, says Andrew Sheng, president of the Fung Global Institute and former chairman of the Hong Kong Securities and Futures Commission.
.

To be sure, that is not what many see. Federal Reserve Board Chairman Ben Bernanke and others have blamed the financial crisis of 2008 on a global savings glut, which fuelled flows of money from highsavings emerging-market economies especially in Asia that run chronic balance-of-payments surpluses. According to this school of thought, excessive savings pushed long-term interest rates down to rock-bottom levels, leading to asset bubbles in the United States and elsewhere. But Claudio Borio and Piti Disayat, economists at the Bank for International Settlements, have argued convincingly that the savings-glut theory fails to explain the unsustainable credit creation in the run-up to the 2008 crisis. They have shown that the major capital inflows were not from emerging markets, but from Europe, where there was no net balance-of-payments surplus.

G20: Cannes Summit The alternative theory of a global credit glut gained more ground with the release of the Financial Stability Boards report on shadow banking. The FSB report contains startling revelations about the scale of global shadow banking, which it defines as credit intermediation involving entities and activities outside the regular banking system. The shadow banking system is estimated at roughly 25-30% of the global financial system ($250 trillion, excluding derivatives) and at half of total global banking assets. This represents a huge regulatory black hole at the center of the global financial system, hitherto not closely monitored for monetary and financial stability purposes. They are complex, because it comprises a mix of institutions and vehicles. Their combined credit creation and proprietary trading and hedging may account for much of the global liquidity flows that make monetary and financial stability so difficult to ensure. The trouble is that, by 2010, the shadow banking system was about the same size as it was just before the 2007 market crash, whereas the regulated global banking system was 18% larger than in 2007. That is why the FSB report pinpoints the shadow banking system, together with the large global banks, as sources of systemic risk. But the global problem is likely to be much larger than the sum of its parts. Specifically, global credit creation by the regular and shadow banking systems is likely to be significantly larger than the sum of the credit creation currently measured by national statistics. There are several reasons for this. First, credit that can be, and is, created offshore and through offbalance-sheet SIVs is not captured by national balance-of-payments statistics. In other words, while a savings glut may contribute to low interest rates and fuel excess credit creation, it is not the main cause. Second, the volatile carry trade is notoriously difficult to measure, because most of it is conducted through derivatives in options, forwards, and swaps, which are treated as off-balance sheet that is, as net numbers that are below the line in accounting terms. Thus, in gross terms, the leverage effects are larger than currently reported. Third, the interaction between the shadow banking system and the global banks is highly concentrated, because the global banks act as prime brokers, particularly for derivative trades. Data from the US Comptroller of Currency suggest that the top five US banks account for 96% of the total over-the-counter (OTC) derivative trades in the US. Indeed, the nightmare scenario haunting the world is the collapse of another shadow banking entity, causing global trade to freeze, as happened in 2008. The Basel III agreement on capital adequacy and other recent reforms still have not ring-fenced trade financing from these potential shocks. We urgently need to monitor and understand the role of shadow banking and the too-big-to-fail banks in creating the global credit glut. Obtaining a full picture of global monetary and credit numbers and their determinants is a vital first step. So far, the G-20s call to think globally has turned into act locally.

G20: Cannes Summit

1st week of November: Sensex down 242 points Daily review Sensex Nifty Weekly review Sensex Nifty 28/10/11 17,804.80 5,360.70 31/10/11 (99.79) (34.10) 28/10/11 17,804.80 5,360.70 01/11/11 (224.18) (68.65) 04/11/11 17,562.61 5,284.20 02/11/11 (15.98) 0.50 03/11/11 17.08 7.30 Points (242.19) (76.50) 04/11/11 80.68 18.45 % (1.36%) (1.43%)

Markets decline as global bourses weigh Markets slipped this week as global concerns weighed on investor sentiments. The Sensex slipped 1.36% or 242.19 points this week to end at 17,562.61. Nifty shed 1.43% or 76.50 points to 5,284.20. Markets could not extend last week's strong rally and slipped 100 points on Monday amidst weakness in the global economy. The Sensex consolidated further on Tuesday as weakness persisted in the European markets. The downward movement continued on Wednesday as Doubts arose on the viability of the Greece-debt deal. The Sensex touched a low of 17,278 on Thursday but

G20: Cannes Summit managed to recover from there. Markets reversed trends on fresh hopes the EU bailout will be passed by the Greek Parliament. Food inflation, according to government data, rose to 12.21% during the week ended October 22, with expensive vegetables, pulses, fruits and milk, putting more burdens on the common man. Food inflation, as measured by the Wholesale Price Index (WPI), stood at 11.43% in the previous week. Finance Minister Pranab Mukherjee expressed grave concern over rising food inflation, even as he attributed the latest spike in prices to increased demand during the festive season. In other news, India's service sector contracted for a second straight month in October, as new business grew at its weakest pace since May 2009 dragged by sagging global demand and tight monetary policy. The seasonally adjusted HSBC Markit Business Activity Index, based on a survey of around 400 firms, slumped to 49.1 in October, its lowest reading in two-and-a-half years and below the 50-mark which separates growth from contraction. It was at 49.8 in September. Also, the bail plea of DMK chief Karunanidhis daughter Kanimozhi has been rejected. Sharad Kumar, Rajeev Agarwal, Karim Morani and Asif Balwa's bail plea have been dismissed. A government official said on Friday that Pakistan has backtracked after granting the Most Favoured Nation status to India in trade. This is likely to impact trade relations negatively between the two nations. BSE auto index slipped 3.3% to 9,248 and was the biggest loser among sectoral indices. With the exception of a few, most automobile companies reported weak sales in October. Rising cost of ownership and high interest rates have cooled down sales of passenger cars and commercial vehicles. BSE metal index shed 2.4%, followed by the oil & gas index. However, the FMCG index gained 0.7% through the week to end at 4,184. Most of the Sensex stocks also ended in red barring a few.

2nd week of November: Sensex down 370 points Daily review Sensex Nifty Weekly review Sensex Nifty 04/11/11 17,562.61 5,284.20 07/11/11 Holiday 04/11/11 17,562.61 5,284.20 08/11/11 6.92 5.15 11/11/11 17,192.82 5,168.85 09/11/11 (207.43) (68.30) 10/11/11 Holiday Points (369.79) (115.35) 11/11/11 (169.28) (52.20) % (2.11%) (2.18%)

Sensex ends in red for second consecutive week Registering its second consecutive decline, the BSE benchmark Sensex shed 2.11% during the truncated trading week ended November 11 amid heavy selling pressure in realty, banking, metal, capital goods and PSU sectors. The market sentiment was bearish in view of lower IIP data and unexpectedly poor quarterly results from some companies. The BSE and NSE were closed on November 7 on account of Eid-ulAzha and on November 10 for Gurunanak Jayanti.

G20: Cannes Summit The BSE Sensex fell by 369.79 points, or 2.11%, to end at 17,192.82 during the trading week ended November 11. The 50-share S&P CNX Nifty also declined by 115.35 points, or 2.18%, to 5,168.85. The maximum fall in the key benchmark indices occurred at the fag-end of the week, following the release of data that showed industrial production rose by a dismal 1.9% in September, 2011, the lowest rate of expansion in 2 years. Manufacturing, basic goods, consumer goods, consumer durables goods sectors showed less growth in the September as compared to a year ago period. But capital goods and mining sectors' growth came in negative. Arun Singh, Senior. Economist, D&B India believes the sharp deceleration in IIP growth reaffirms the slowdown in the economic activity. The capital goods yet again plummeted into the negative territory pointing to the rising interest rates, high inflation and weak global and domestic sentiment taking its toll on the investment activity. Banking stocks fell as the 10-year benchmark bond yield approached 9% during the week. State Bank of India was the big loser during the week, losing 8.48% following the announcement of an increase in the bank's bad loans in the second quarter ended September, 2011. SBI reported higher-than-expected NPAs and Moody's downgrade of the Indian banking system to 'negative' from 'stable' was enough to create capitulation in stocks. Exposure to Kingfisher Airlines too added to the injury of banks. ICICI Bank, SBI and IDBI Bank have major exposure to debts of Kingfisher Airlines. Markets were also lower on the back of continued concerns on Europe. European concerns continued to impact global markets over the week with Italy being the new focus area. Greece has appointed a new Prime Minister and Italy is also expected to appoint one soon. Experts feel that the market will have to live with the problems in eurozone. But the most worried fact is tax collections, which are not going up. "Others causes of concerns are - 10-year yields are going up and crude oil is not coming down. Depreciation in the rupee was another cause of concern.

1.3

FINANCIAL SECTOR Cannes Summit Final Declaration Implementing and deepening Financial sector reforms

Building Our Common Future: Renewed Collective Action For The Benefit Of All 4 November 2011 We are determined to fulfil the commitment we made in Washington in November 2008 to ensure that all financial markets, products and participants are regulated or subject to oversight as appropriate to their circumstances in an internationally consistent and non-discriminatory way. Meeting our commitments notably on banks, OTC derivatives, compensation practices and credit rating agencies, and intensifying our monitoring to track deficiencies Improving banks resilience to financial and economic shocks: Building on progress made to date, we call on jurisdictions to meet their commitment to implement fully and consistently the Basel II risk-based framework

G20: Cannes Summit as well as the Basel II-5 additional requirements on market activities and securitization by end 2011 and the Basel III capital and liquidity standards, while respecting observation periods and review clauses, starting in 2013 and completing full implementation by 1 January 2019. Reforming the OTC derivatives markets is crucial to build a more resilient financial system. All standardized over-the-counter derivatives contracts should be traded on exchanges or electronic trading platforms, where appropriate, and centrally cleared, by the end of 2012; OTC derivatives contracts should be reported to trade repositories, and non-centrally cleared contracts should be subject to higher capital requirements. We agree to cooperate further to avoid loopholes and overlapping regulations. A coordination group is being established by the FSB to address some of these issues, complementing the existing OTC derivatives working group. We endorse the FSB progress report on implementation and ask the CPSS and IOSCO to work with FSB to carry forward work on identifying data that could be provided by and to trade repositories, and to define principles or guidance on regulators and supervisors access to data held by trade repositories. We call on the Basel Committee on Banking Supervision (BCBS), the International Organization for Securities Commission (IOSCO) together with other relevant organizations to develop for consultation standards on margining for non-centrally cleared OTC derivatives by June 2012, and on the FSB to continue to report on progress towards meeting our commitments on OTC derivatives.

Discouraging compensation practices that lead to excessive risk taking We reaffirm our commitment to discourage compensation practices that lead to excessive risk taking by implementing the agreed FSB principles and standards on compensation. While good progress has been made, impediments to full implementation remain in some jurisdictions. We therefore call on the FSB to undertake an ongoing monitoring and public reporting on compensation practices focused on remaining gaps and impediments to full implementation of these standards and carry out an on-going bilateral complaint handling process to address level playing field concerns of individual firms. Based on the findings of this ongoing monitoring, we call on the FSB to consider any additional guidance on the definition of material risk takers and the scope and timing of peer review process.

Reducing reliance on external credit ratings We reaffirm our commitment to reduce authorities and financial institutions reliance on external credit ratings, and call on standard setters, market participants, supervisors and central banks to implement the agreed FSB principles and end practices that rely mechanistically on these ratings.

G20: Cannes Summit We ask the FSB to report to our Finance Ministers and Central Bank Governors at their February meeting on progress made in this area by standard setters and jurisdictions against these principles.

Intensify our monitoring of financial regulatory reforms We agree to intensify our monitoring of financial regulatory reforms, report on our progress and track our deficiencies. To do so, we endorse the FSB coordination framework for implementation monitoring, notably on key areas such as: The Basel capital and liquidity frameworks, OTC derivatives reforms, Compensation practices, G-SIFI policies, Resolution frameworks, and Shadow banking.

This work will build on the monitoring activities conducted by standard setting bodies to the extent possible. We stress the need to report the results of this monitoring to the public including on an annual basis through a traffic lights scoreboard prepared by the FSB. We welcome its first publication today and commit to take all necessary actions to progress in the areas where deficiencies have been identified. Addressing the too big to fail issue We are determined to make sure that no financial firm is too big to fail and that taxpayers should not bear the costs of resolution. To this end, we endorse the FSB comprehensive policy framework, comprising a new international standard for resolution regimes, more intensive and effective supervision, and requirements for cross-border cooperation and recovery and resolution planning as well as, from 2016, additional loss absorbency for those banks determined as global systemically important financial institutions (G-SIFIs). The FSB publishes today an initial list of G-SIFIs, to be updated each year in November. We will implement the FSB standards and recommendations within the agreed timelines and commit to undertake the necessary legislative changes, step up cooperation amongst authorities and strengthen supervisory mandates and powers. We ask the FSB in consultation with the BCBS, to deliver a progress report by the G20 April Finance meeting on the definition of the modalities to extend expeditiously the G SIFI framework to domestic systemically important banks. We also ask the IAIS to continue its work on a common framework for the supervision of internationally active insurance groups, call on CPSS and IOSCO to continue their work on

G20: Cannes Summit systemically important market infrastructures and the FSB in consultation with IOSCO to prepare methodologies to identify systemically important non-bank financial entities by end-2012. Filling in the gaps in the regulation and supervision of the financial sector Bank-like activities The shadow banking system can create opportunities for regulatory arbitrage and cause the build-up of systemic risk outside the scope of the regulated banking sector. To this end, we agree to strengthen the regulation and oversight of the shadow banking system and endorse the FSB initial eleven recommendations with a work-plan to further develop them in the course of 2012, building on a balanced approach between: Indirect regulation of shadow banking through banks and Direct regulation of shadow banking activities, including money markets funds, securitization, securities lending and repo activities, and other shadow banking entities.

We ask Finance Ministers and Central Bank Governors to review the progress made in this area at their April meeting. Markets We must ensure that markets serve efficient allocation of investments and savings in our economies and do not pose risks to financial stability. To this end, we commit to implement initial recommendations by IOSCO on market integrity and efficiency, including measures to address the risks posed by high frequency trading and dark liquidity, and call for further work by mid-2012. We also call on IOSCO to assess the functioning of credit default swap (CDS) markets and the role of those markets in price formation of underlying assets by our next Summit. We support the creation of a global legal entity identifier (LEI) which uniquely identifies parties to financial transactions. We call on the FSB to take the lead in helping coordinate work among the regulatory community to prepare recommendations for the appropriate governance framework, representing the public interest, for such a global LEI by our next Summit. Commodity markets We welcome the G20 study group report on commodities and endorse IOSCOs report and its common principles for the regulation and supervision of commodity derivatives markets. We need to ensure enhanced market transparency, both on cash and financial commodity markets, including OTC, and achieve appropriate regulation and supervision of participants in these markets. Market regulators and authorities should be granted effective intervention powers to address disorderly markets and prevent market abuses. In particular, market regulators should have, and use formal position management powers, including the power to set ex-ante position limits, particularly in the delivery month where

G20: Cannes Summit appropriate, among other powers of intervention. We call on IOSCO to report on the implementation of its recommendations by the end of 2012. Consumer protection We agree that integration of financial consumer protection policies into regulatory and supervisory frameworks contributes to strengthening financial stability, endorse the FSB report on consumer finance protection and the high level principles on financial consumer protection prepared by the OECD together with the FSB. We will pursue the full application of these principles in our jurisdictions and ask the FSB and OECD along with other relevant bodies, to report on progress on their implementation to the upcoming Summits and develop further guidelines if appropriate. Other regulatory issues We are developing macro-prudential policy frameworks and tools to limit the build-up of risks in the financial sector, building on the ongoing work of the FSB-BIS-IMF on this subject. We endorse the joint report by FSB, IMF and World Bank on issues of particular interest to emerging market and developing economies and call international bodies to take into account emerging market and developing economies specific considerations and concerns in designing new international financial standards and policies where appropriate. We reaffirm our objective to achieve a single set of high quality global accounting standards and meet the objectives set at the London summit in April 2009, notably as regards the improvement of standards for the valuation of financial instruments. We call on the IASB and the FASB to complete their convergence project and look forward to a progress report at the Finance Ministers and Central Bank governors meeting in April 2012. We look forward to the completion of proposals to reform the IASB governance framework. 2.1 INDIAN ECONOMY PM Manmohan Singh's statement ahead of Cannes G20 Summit November 2, 2011, "I leave today to attend the G-20 Summit in Cannes, France at the invitation of President Nicolas Sarkozy. The Cannes Summit takes place against the backdrop of the sovereign debt crisis in the Eurozone. This crisis has emerged as the principal source of concern for the global economy. The twin Summits of the European Union and Eurozone a few days ago have helped to restore a measure of confidence in the markets, but much more needs to be done. It is imperative that the difficult decisions needed to address the economic challenges in Europe and elsewhere are taken swiftly. The Eurozone is a historic project. India would like the Eurozone to prosper, because in Europe's prosperity lies our own prosperity. It is important for the Cannes Summit to signal a strong and coordinated approach to put the global economy back on track, while addressing medium term structural issues. Developing economies such as India need a conducive global economic environment to address the vast challenges they face.

G20: Cannes Summit In an increasingly interdependent world, we have to be wary of contagion effects and the import of inflationary pressures in our economy. We need to ensure that developing countries have access to requisite funds through multilateral development banks and to investible surpluses to meet their infrastructure and other priority needs. The issue of global governance will also come up for discussion. This is an issue of importance to India, and we will work with others to develop effective and representative global governance mechanisms and carry forward the process of reform of the international monetary and financial system. I will separately hold a bilateral meeting with President Nicolas Sarkozy during my visit. I also look forward to meeting (British) Prime Minister David Cameron, (Australian) Prime Minister Julia Gillard, as well as the European Union leaders Mr. Herman Van Rompuy and Mr. Jose Manuel Barroso." Singh, who will be at the G20 summit for the sixth consecutive time since it was first hosted by the US in 2008, is also likely to push through India's agenda for voluntary exchange of tax information to curb black money. Singh is accompanied by Deputy Chairman Planning Commission Montek Singh Ahluwalia and National Security Advisor Shiv Shankar Menon. India wants the G20, which accounts for 85% of the global output and 2/3rd of the world population, to include new measures to clamp tax violation channels. The two-day meet will be dominated by efforts by European leaders to resolve the sovereign debt crisis after the 17-nation Eurozone sealed a deal last month critical for global economic recovery. The summit hosted by French President Nikolas Sarkozy is expected to seek commitments from all G20 members on growth and on rebalancing public finances. US President Barack Obama, British Premier David Cameron and Chinese President Hu Jintao will be among the world leaders at the critical summit. 2.2 INTERNATIONAL G20 summit: A Greek tragedy and a grand failure After two days of hectic talks in Cannes by top world leaders to resolve the Eurozone debt crisis, the G20 Summit is being seen as a failure. The bigger worry now is that the spillover from Europe will lead to another downturn. Nicholas Sarkozy, the host of the sixth G20 Summit, was hoping that it would go beyond being just a photo opportunity for the world's most powerful leaders. Gathered in the glitzy French beach town of Cannes, he wanted to use the summit as an opportunity to tell the world that a plan to deal with the European debt crisis had finally been made. But it soon became a Greek tragedy in Cannes with developments in Greece hijacking the G20 agenda. The idea of a Greek referendum came as quickly as it went. At a meeting of BRICS (Brazil, Russia, India, China and South Africa) countries on the sidelines of the G20 summit, leaders of emerging economies agreed that any support for debt-ridden Eurozone must be routed through the International Monetary Fund (IMF).

G20: Cannes Summit But experts say the G20 summit has ended in disarray with no specifics on how the war-chest of the IMF will be increased. Financial markets have already given their verdict that they are unimpressed with the outcome. "If anyone thought that the Eurozone crisis, which has been in the offing for the last three years, will melt, as a result of a one-and a half day conference, I think it was an over-exuberance in thinking," Prime Minister Manmohan Singh. "After two days of very substantial discussions, I can say that we have come together and made important progress to put our economic recoveries on a firmer footing," said US President Barack Obama. It seemed like a desperate attempt on the part of President Obama to close the summit on a positive note and to send a message that would boost global confidence. But without any concrete plans on the table, the summit is being termed as a failure making the possibility of a second recession more real than ever before.

2.3

WARNING SIGNALS G-20: No Crowning Glory for Sarkozy at Cannes Summit

The slogan is dotted on bus stop advertising billboards bus stops all over this French Riveria city, summing up the grand ambitions President Nicolas Sarkozy had for France's presidency of the Group of 20 leading nations: "History is being written in Cannes." France staked out big plans for its year-long leadership of the G20, targeting reform of the international monetary system, combating commodity price volatility and reforming global governance. In the end, there was no big bang. The Cannes summit was overwhelmed by the euro-zone's debt crisis and the inability of the elite group to itself provide any answers to jumpstart the global economy. Editorialist Alexandre Delaigue at French newspaper Liberation said the summit was like the orchestra playing on the Titanic as the ship went down.

G20: Cannes Summit Sarkozy had promised only a few weeks ago to present the definitive solution to the euro-zone's crisis at this gathering. Instead, Europeans were reduced to pushing negotiations on how their international partners could help them out. No solution was found, and the can was kicked down the road. "An all too familiar G-20 meeting has just concluded with many promises made, many of which have been made, and broken, in the past," said HSBC Senior Global Economist Karen Ward. The 56 year-old president was defiant, describing progress as "spectacular" relative to France's goals. But he acknowledged monetary system reform--which France had emphasized above all else--is a long term project for the coming years. Sarkozy said progress had been made too on things like tax havens and getting a mention of the idea of a financial transaction tax into the final communique, even if the hosts of some of the world's biggest financial markets are firmly against the idea. The reality is Sarkozy's presidency of the G20 was hijacked by the euro zone crisis, with the Cannes summit dominated by the political turmoil in Greece, a tiny Mediterranean country that is not even a member of the G20. Sarkozy is fighting to get France's public finances under control, a battle that is expected to lead to more austerity plans in coming weeks after Moody's Investors Service warned the outlook on the country's triple-A rating is under pressure. The fallout from Cannes could have political repercussions for Mr.Sarkozy, who is widely expected to seek reelection next spring. Socialist presidential candidate Francois Hollande was quick to offload some stinging criticism, describing Sarkozy as an "animator" rather than a "player" in financial regulation. "Europe appeared in a position of weakness," Mr. Hollande told French radio Europe 1. 3.1 COMMODITY MARKETS Cannes Summit Final Declaration Addressing Food Price Volatility and Increasing Agriculture Production and Productivity

Building Our Common Future: Renewed Collective Action For The Benefit Of All 4 November 2011 Increasing agricultural production and productivity is essential to promote food security and foster sustainable economic growth. A more stable, predictable, distortion free, open and transparent trading system allows more investment in agriculture and has a critical role to play in this regard. Mitigating excessive food and agricultural commodity price volatility is also an important endeavour.

G20: Cannes Summit These are necessary conditions for stable access to sufficient, safe and nutritious food for everyone. We agreed to mobilize the G20 capacities to address these key challenges, in close cooperation with all relevant international organisations and in consultation with producers, civil society and the private sector. Our Agriculture Ministers met for the first time in Paris on 22-23 June 2011 and adopted the Action Plan on Food Price Volatility and Agriculture. We have decided to act on the five objectives of this Action Plan: (i) Improving agricultural production and productivity, (ii) Increasing market information and transparency, (iii) Reducing the effects of price volatility for the most vulnerable, (iv) Strengthening international policy coordination and (v) Improving the functioning of agricultural commodity derivatives markets. We commit to sustainably increase agricultural production and productivity. To feed a world population expected to reach more than 9 billion people by 2050, it is estimated that agricultural production will have to increase by 70% over the same period. We agree to further invest in agriculture, in particular in the poorest countries, and bearing in mind the importance of smallholders, through responsible public and private investment. In this regard, we decide to: Urge multilateral development banks to finalise their joint action plan on water, food and agriculture and provide an update on its implementation by our next Summit; Invest in research and development of agricultural productivity. As a first step, we support the International Research Initiative for Wheat Improvement (Wheat Initiative), launched in Paris on September 15, 2011 and we welcome the G20 Seminar on Agricultural Productivity held in Brussels on 13 October 2011 and the first G20 Conference on Agricultural Research for Development, held in Montpellier on 12-13 September 2011, designed to foster innovation-sharing with and among developing countries. We commit to improve market information and transparency in order to make international markets for agricultural commodities more effective. To that end, we launched: - The Agricultural Market Information System (AMIS) in Rome on September 15, 2011, to improve information on markets. It will enhance the quality, reliability, accuracy, timeliness and comparability of food market outlook information. As a first step, AMIS will focus its work on four major crops: wheat, maize, rice and soybeans. AMIS

G20: Cannes Summit involves G20 countries and, at this stage, Egypt, Vietnam, Thailand, the Philippines, Nigeria, Ukraine and Kazakhstan. It will be managed by a secretariat located in FAO; - The Global Agricultural Geo-monitoring Initiative in Geneva on September 22-23, 2011. This initiative will coordinate satellite monitoring observation systems in different regions of the world in order to enhance crop production projections and weather forecasting data. We recognize that appropriately regulated and transparent agricultural financial markets are a key for well-functioning physical markets and risk management. We welcome IOSCO recommendations on commodity derivatives endorsed by our Finance Ministers. We commit to mitigate the adverse effects of excessive price volatility for the most vulnerable through the development of appropriate risk-management instruments. According to the Action Plan, we agree to remove food export restrictions or extraordinary taxes for food purchased for non-commercial humanitarian purposes by the World Food Program and agree not to impose them in the future. In this regard, we encourage the adoption of a declaration by the WTO for the Ministerial Conference in December 2011. We have launched a Rapid Response Forum in Rome on September 16, 2011 to improve the international communitys capacity to coordinate policies and develop common responses in time of market crises. We welcome the production of a report by the international organizations on how water scarcity and related issues could be addressed in the appropriate fora. We commend the joint work undertaken by FAO, OECD, The World Bank Group, IFAD, UNCTAD, WFP, WTO, IMF, IFPRI and the UN HLTF to support our agenda and we request that they continue working closely together. We will keep progress on the implementation of the Action Plan on Food Price Volatility and Agriculture. 3.2 ENERGY MARKETS Cannes Summit Final Declaration Improving the functioning of Energy Markets We stress the importance of well-functioning and transparent physical and financial energy markets, reduced excessive price volatility, improved energy efficiency and better access to clean technologies, to achieve strong growth that is both sustainable and inclusive. We are committed to promote sustainable development and green growth and to continue our efforts to face the challenge of climate change. We commit to more transparent physical and financial energy markets. Commodity derivatives are being addressed as part of our financial regulation reform agenda. We have made progress and reaffirm our commitment to improve the timeliness, completeness and reliability of the JODI-Oil database as soon as possible. We also commit to support the IEF JODI work in order to improve the reliability of JODI-Oil

G20: Cannes Summit and look forward to receiving their recommendations. We will regularly review and assess progress made on this front. We welcome the IEF Charters commitment to improve dialogue between oil producer and consumer countries, as well as the holding on January 24, 2011 of the Riyadh Symposium on short, medium and long term outlook and forecasts for oil markets. We call for those meetings to be held on an annual basis and for the IEF, the IEA and OPEC to release a joint communiqu and a report highlighting their outcomes. We note the new JODI-Gas database and commit to work on contributing to it on the basis of the same principles as the JODI-Oil database. We also call for annual symposiums and communiqus on short, medium and long term outlook and forecasts for gas and coal. We call for further work on gas and coal market transparency and ask the IEA, IEF and OPEC, to provide recommendations in this field by mid2012. Recognizing the role of Price Reporting Agencies for the proper functioning of oil markets, we ask IOSCO, in collaboration with the IEF, the IEA and OPEC, to prepare recommendations to improve their functioning and oversight to our Finance Ministers by mid-2012. We reaffirm our commitment to rationalise and phase-out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption, while providing targeted support for the poorest. We welcome the country progress reports on implementing strategies for rationalizing and phasing out inefficient fossil fuel subsidies, as well as the joint report from the IEA, OPEC, OECD and the World Bank on fossil fuels and other energy support measures. We ask our Finance Ministers and other relevant officials to press ahead with reforms and report back next year.

4. TOMORROW

FINANCIAL SECTOR: TRANSFORMING G20 Leaders Summit Cannes 3-4 November 2011 Welcome From the French G20 Presidency France is very honored to chair the Group of Twenty in 2011. The G20 was established in 1999, in the wake of the 1997 Asian Financial Crisis, to bring together major advanced and emerging economies to stabilize the global financial market. Since its inception, the G20 has held annual Finance Ministers and Central Bank Governors' Meetings and discussed measures to promote the financial stability of the world and to achieve a sustainable economic growth and development. To tackle the financial and economic crisis that spread across the globe in 2008, the G20 members were called upon to further strengthen international

G20: Cannes Summit cooperation. Accordingly, the G20 Summits have been held in Washington in 2008, in London and Pittsburgh in 2009, and in Toronto and Seoul in 2010. The concerted and decisive actions of the G20, with its balanced membership of developed and developing countries helped the world deal effectively with the financial and economic crisis, and the G20 has already delivered a number of significant and concrete outcomes: First, the scope of financial regulation has been largely broadened and prudential regulation and supervision have been strengthened. There was also great progress in policy coordination thanks to the creation of the framework for a strong, sustainable and balanced growth designed to enhance macroeconomic cooperation among the G20 members and therefore to mitigate the impact of the crisis. Finally, global governance has dramatically improved to better take into consideration the role and the needs of emerging of developing countries, especially through the ambitious reforms of the governance of the IMF and the World Bank. Building on these important progresses, the G20 has now to adapt to a new economic environment. It must prove that it is able to coordinate the economic policies of major economies on an ongoing basis. 2011 will be the occasion to build on the recent successes of the G20 and ensure an active follow-up on processes already underway. It will also be the time to address other essential issues which are crucial to global stability such as the reform of the international monetary system and the volatility of commodity prices. We believe indeed that today's key economic challenges require a collective and ambitious action which the G20 is able to impulse.

4.1. FINANCIAL ADVISORS:

Weigh impact on investors:

The Cannes Action Plan for Growth and Jobs The global economy has entered a new and difficult phase. Global growth has weakened, downside risks have heightened, and confidence has waned. Uncertainty over the sustainability of public debt levels in some advanced economies has increased, and the rebalancing in demand from the public to the private sector and from the external to the domestic sector has not materialized. In Europe, sovereign debt risks in some countries have generated a difficult dynamic of rising interest costs and stresses

G20: Cannes Summit in the banking system, which are now weighing on confidence and real activity in the euro area. Growth in the euro area is now projected to be weaker and unemployment higher. In the US, the recovery has been shallower than expected. The desired rebound in private demand has not materialized due to a combination of weak job growth, the ongoing correction in the housing sector and the associated rebuilding of household balance sheets. More certainty and determination over medium-term fiscal consolidation will contribute to the strengthening of growth. In emerging markets, there are also clear signs of a slowing in growth as developments in advanced economies begin to weigh on these countries. In some emerging market economies, financial stability and overheating risks remain. The lack of exchange rate flexibility in some countries limits policy options to deal with these risks.

In the face of these challenges, we agree that strengthened international policy cooperation is needed now. We have agreed on an Action Plan to address short-term vulnerabilities and strengthen medium-term foundations for growth. We are firmly committed to support the recovery, ensure financial stability and restore confidence. Only through collective actions on all of these fronts will we move closer to stronger, more sustainable and balanced growth. Our ultimate objective is to provide more and better jobs for our citizens, to promote social inclusion in all countries, and to foster development and poverty reduction particularly in less developed countries around the globe. We have met our Seoul commitment to develop indicative guidelines to assess persistently large imbalances. This Action Plan reflects the views of the G20 and draws on the IMF Staffs independent assessments of the root causes of these imbalances and recommended policies to address them. We hereby commit to decisively pursue the introduction of the following actions without delay.

4.2 FINANCIAL PLANNERS Value unlocking for all stakeholders: Addressing Short-term Vulnerabilities and Restoring Financial Stability We have agreed on a plan to sustain the near-term recovery, promote growth and restore financial stability in a manner that complements our medium-term reforms: 1. We commit to take all necessary actions to preserve the stability of banking systems and financial markets. We will ensure that banks are adequately capitalized and have sufficient access to funding to deal with current risks. Central Banks continue to stand ready to provide liquidity to banks as required.

G20: Cannes Summit 2. G-20 members agree to implement an appropriate mix of measures to secure the recovery. a) Monetary policies will maintain price stability over the medium term and continue to support economic recovery. As warranted by national circumstances, including medium term consolidation plans, monetary policy will respond to changes in economic and financial market conditions subject to their likely impact on the medium-term outlook for price developments. b) Advanced countries, taking into account different national circumstances, will adopt policies to build confidence and support growth, and implement clear, credible and specific measures to achieve fiscal consolidation, including as set out in the country specific commitments below. c) Governments in the euro area commit to take all necessary measures and actions needed to ensure the stability of the euro area and have adopted a comprehensive package. (i) (ii) (iii) After having decided to flexibilise the EFSF instruments on the 21 July 2011, the 26 October euro area Summit agreed on a substantial leveraging of its resources up to 1 trillion euro. Euro area countries agreed to significantly strengthen economic and fiscal surveillance and governance of the euro area. A particular effort in terms of fiscal consolidation and structural reforms will be made by those euro area Member States that are experiencing tensions in sovereign debt markets. An exceptional solution was found to ensure the sustainability of the Greek public debt through a rigorous adjustment programme and a voluntary nominal discount on Greek debt held by private investors. Last, a comprehensive set of measures to raise confidence in the banking sector has been agreed, including by facilitating access to term-funding where appropriate and temporarily increasing the capital position of large banks to 9% of Core Tier 1 capital after accounting for sovereign exposures by the end of June 2012, while maintaining the credit flow to the real economy and ensuring that these plans will not lead to excessive deleveraging.

(iv)

(v)

d) Italy commits to reaching a rapidly declining debt-to-GDP ratio starting in 2012 and close to a balanced budget by 2013. This objective, based on the full implementation of the 60 billion euro fiscal package approved during the summer, will be underpinned by the strengthening of the fiscal rules, stemming from both the European legislation and the introduction in the constitution of the balanced budget rule. Italy commits to implement, fully and swiftly, the comprehensive plan of growth enhancing structural reforms announced on October 26th. We support the measures presented by Italy in the Euro Summit and the agreed detailed assessment and monitoring by the European Commission. In this context, we welcome Italy's decision to invite the IMF to carry out a public verification of its policy implementation on a quarterly basis. e) The US commits to the timely implementation of a package of near-term measures to sustain the recovery, through public investments, tax reforms, and targeted jobs measures, consistent with a credible plan for medium-term fiscal consolidation.

G20: Cannes Summit f) Japan commits to the expeditious implementation of substantial fiscal measures for reconstruction from the earthquake estimated at least 19 trillion yen (about 4% of GDP), while ensuring the commitment to medium-term fiscal consolidation. g) Australia, Brazil, Canada, China, Germany, Korea and Indonesia, where public finances remain relatively strong, taking into account national circumstances, agree to let automatic fiscal stabilisers work and, should global economic conditions materially worsen, agree to take discretionary measures to support domestic demand as appropriate, while maintaining their medium-term fiscal objectives. h) Emerging market economies commit to adopting macroeconomic policies to enhance the resilience of their economies and those in surplus will adopt macroeconomic policies to move towards more domestic-led growth, thus supporting the global recovery and financial stability. 3. We affirm our commitment to move more rapidly toward market-determined exchange rate systems and enhance exchange rate flexibility to reflect underlying fundamentals and refrain from competitive devaluation of currencies. The actions above should help address challenges created by developments in global liquidity and capital flow volatility, thus facilitating further progress on exchange rate reforms and reducing excessive accumulation of reserves. We welcome the recent changes to Russias foreign exchange regime to allow the rouble to move more in line with market forces and Chinas determination to increase exchange rate flexibility consistent with underlying market fundamentals. 4. We recognize the special circumstances of large commodity producers in terms of reserve accumulation. 5. In all policy areas, we commit to minimize the negative spillovers on other countries of policies implemented for domestic purposes. We reaffirm our shared interest in a strong and stable international financial system, and our support for market-determined exchange rates. We reiterate that excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability. 6. We commit that the IMF must have adequate resources to fulfill its systemic responsibilities.

4.3 RISK MANAGEMENT CONSULTANTS Educate and Engineer Enforce Strengthening the Medium-term Foundations for Growth We have agreed that the actions to address immediate risks to recovery must be complemented by sustained, broad-based reforms to boost confidence, raise global output and create jobs. We have agreed to a six-point plan to strengthen the mediumterm foundations for growth: 1. Commitments to fiscal consolidation;

G20: Cannes Summit 2. Commitments to boost private demand in countries with current account surpluses, and, where appropriate, to rotate demand from the public to the private sector in countries with current account deficits; 3. Structural reforms to raise growth and enhance job creation across G-20 members; 4. Reforms to strengthen national/global financial systems; 5. Measures to promote open trade and investment, rejecting protectionism in all its forms; and 6. Actions to promote development. 1. Commitments to fiscal consolidation: Specific and concrete fiscal consolidation plans are essential to put public finances on a credible and sustainable track, and are key to reducing current account deficits (raising national savings), which will further promote global rebalancing in a number of large countries. a) Australia, Canada, France, Germany, Italy, Korea, Spain, the UK, and the US reaffirm their Toronto commitment to clear and credible fiscal consolidation plans to halve deficits by 2013 from 2010 levels, and stabilise or reduce government debtto-GDP ratios by 2016. These plans will be robust to a range of economic outcomes, informed by prudent economic assumptions and, in some cases, reinforced with fiscal rules that take into account the economic cycle. In particular: o The United States commits to place its debt-to-GDP ratio on a declining path no later than the middle of the decade through a balanced deficit reduction plan that builds on the Budget Control Act of 2011, which enacted about $1 trillion in discretionary savings over the next ten years and locked in at least an additional $1.2 trillion in deficit reduction beyond that. The plan will include: additional spending reductions, among them reforms to entitlement programs; tax reform that raises revenue, lowers rates, and cuts tax loopholes and expenditures; and stronger budgetary rules to enhance predictability and credibility. In combination with the Budget Control Act, these reforms will yield a total deficit reduction of $4 trillion over 10 years. o France commits to reducing its fiscal deficit to 3% in 2013 through: tighter limits on central government and health insurance expenditure; better targeted social transfers; a growth-friendly reduction of tax expenditures; and the inscription of existing fiscal rules into the Constitution to anchor stability. o The UK reaffirms its commitment to its planned fiscal consolidation and the detailed four-year departmental expenditure plans set out in the 2010 Spending Review. It will also undertake structural reforms, including measures to ensure growth-friendly fiscal adjustment and measures to address

G20: Cannes Summit long-term spending pressures and imbalances, such as managing future increases in the state pension age more systematically in response to changes in longevity. b) Japan commits to implementing the Definite Plan for the Comprehensive Reform of Social Security and Tax which sets out policies including the gradual increase in the consumption tax to 10% by the middle of this decade and to submitting implementing legislation by the end of FY2011 to realise these policies, in order to meet its Toronto commitment. c) India commits to strengthening revenue mobilization through tax reforms, including a unified goods and services tax, and overhauling the personal and corporate tax code.

2. Commitments to boost private demand in countries with current account surpluses, and, where appropriate, to rotate demand from the public to the private sector in countries with current account deficits: Countries with large current account surpluses and those with relatively weak private demand will play an important role in rebalancing and sustaining global demand. a) Germany will implement measures to promote private consumption and investment, with the expectation that, expressed as a share of GDP, both components will increase over time. Germany commits to taking measures aimed at strengthening domestic demand, including by alleviating inefficiencies that may underpin low investment and high private savings.

G20: Cannes Summit b) Recognizing that private demand has been relatively weak in recent years, Japan will implement measures to promote private consumption and investment with the expectation that, expressed as a share of GDP, both components will increase over time. This includes accelerating the implementation of the New Growth Strategy comprising policies that will boost demand for a range of services \ c) China will rebalance demand towards domestic consumption by implementing measures to strengthen social safety nets, increase income and transform the economic growth pattern. These actions will be by ongoing measures to promote greater exchange rate flexibility to reflect underlying economic fundamentals, and gradually reduce the pace accumulation of foreign reserves..

household reinforced better of

d) Other surplus economies recognise that they too have a significant role to play in promoting global rebalancing and commit to encourage private spending (Indonesia, Korea). Indonesia has announced a national plan for infrastructure that will significantly increase private investment.

4.4 CREDIT COUNSELORS Resolve convertibility and recompensation issue: Cont/Strengthening the Medium-term Foundations for Growth 3. Structural reforms to raise growth and enhance job creation across G-20 members: Further progress on structural reforms is critical to raising output in all G20 countries. a) Structural reforms will be combined with active, flexible labour market policies and effective labour institutions that provide

G20: Cannes Summit incentives for increasing formal and quality jobs. Members commit to promote mobility and encourage participation, including tax and benefit reforms to reduce long-term unemployment and encourage the participation of older workers and women where appropriate. b) Members will enhance competition and reduce distortions. Actions include: Infrastructure investment (Brazil, India, Indonesia, Mexico, Saudi Arabia, South Africa); Supporting research, education and skills development and eliminating tariffs on machinery and manufacturing inputs (Canada); Reform of pricing for factors of production, promote market-based interest rate reform in an orderly manner and gradually achieve RMB capital account convertibility as stated in its current 5-year plan (China); Structural reforms in the services sector to boost productivity (France, Germany, Italy, Korea); Tax reform aimed at a more employment-friendly taxation (Germany, Italy); Raising standards of disclosure of information by financial institutions (Russia); Phasing out wasteful and distortive subsidies in the medium term, while providing targeted support for the poor (India, Indonesia); Reforms to energy efficiency and greater use of renewable and domestic energy resources (Turkey), agriculture (Argentina); Enhanced regional integration to promote trade and investment (South Africa); Improved practices and enhanced oversight of the short-term financing markets and reforms to help promote a rise in household savings as a share of GDP (US); Transitioning to a clean energy economy through effective carbon price mechanism (Australia) and, Efforts to promote green growth (Korea). c) The EU is fully committed to accelerate and further deepen the Single Market integration through a comprehensive programme based on twelve key priority actions to boost growth. These include actions in the areas of services, trans-European networks, the digital single market, workers' mobility, financing for small and medium-sized enterprises and taxation. In the framework of the 'Europe 2020' strategy, the EU adopted several targets for 2020: to raise to 75% the employment rate for those aged 20-64, to improve the education levels, and to raise the share of public and private investment levels in R&D to 3% of EU's GDP. d) We recognize the importance to the global economic recovery of maintaining stability in international oil markets, at a level consistent with global economic growth, as well as increasing transparency of energy policies in all countries.

G20: Cannes Summit e) Saudi Arabia is committed to continue playing its systemic role in stabilizing the oil markets in support of the global economy. 4. Reforms to strengthen national/global financial systems; We commit to the full and timely implementation of the financial sector reform agenda agreed up through Seoul, including: implementing Basel II, II.5 and III along the agreed timelines; more intensive supervisory effort; clearing and trading obligations for OTC derivatives; standards and principles for sounder compensation practices, achieving a single set of high quality global accounting standards; a comprehensive framework to address the risks posed by systemically-important financial institutions; and, strengthened regulation and oversight of shadow banking. We endorsed the joint IMF/WB/FSB report on financial stability issues in emerging markets and developing economies. 5. Measures to promote open trade and investment, rejecting protectionism in all its forms: We reaffirm our commitment to resist protectionism in all forms, rectify WTO inconsistent measures and advance the multilateral trade agenda, as agreed in Toronto. 6. Actions to promote development: While reducing barriers to trade and investment will help reduce the development gap and support progress towards the Millennium Development Goals, further efforts to support capacity building and channelling of surplus savings for growth-enhancing investments in developing countries, including infrastructure development, would also have positive spillovers for global growth, rebalancing and development. a) Improved market access for least developed countries should be complemented with a strengthening of trade facilitation, trade finance and aid-for-trade programs to enhance their trade capacity. b) Developing countries have the potential to contribute to stronger and more balanced global growth and should be viewed as markets for investment, especially in infrastructure. We welcome the MDBs Infrastructure Action Plan and the HLP recommendations. It is important to ensure adequate flows of official financing for development as well as to promote innovative approaches that leverage private capital. We will also hold ourselves accountable for meeting our commitments to address near-term vulnerabilities and move ahead on reforms. We will enhance our reporting and monitoring in 2012 and future years, developing a framework to assess progress against our commitments for the reform of our fiscal, financial, structural, and monetary and exchange rate, trade and development policies. As agreed in Seoul, we will continue to use the indicative guidelines as a mechanism to assess progress in rebalancing, and the consistency of fiscal, monetary, financial sector, structural, exchange rate and other policies.

G20: Cannes Summit We will continue to coordinate policy in the future as economic conditions evolve. Our Framework for Strong, Sustainable and Balanced Growth is not a point in time exercise, but a dynamic process to adjust to developments. We ask our Finance Ministers to work closely together in the coming months to address vulnerabilities and sustain recovery.

4.5 ISSUES OF THE PRESENT Freedom to get & fail in the system of free enterprise: G20 Leaders Summit Cannes 3-4 November 2011 Communiqu Since our last meeting, global recovery has weakened, particularly in advanced countries, leaving unemployment at unacceptable levels. In this context, tensions in the financial markets have increased due mostly to sovereign risks in Europe; there are also clear signs of a slowing in growth in the emerging markets. Commodity price swings have put growth at risk. Global imbalances persist. Today, we reaffirm our commitment to work

G20: Cannes Summit together and we have taken decisions to reinvigorate economic growth, create jobs, ensure financial stability, promote social inclusion and make globalization serve the needs of the people. A global strategy for growth and jobs 1. To address the immediate challenges faced by the global economy, we commit to coordinate our actions and policies. Each of us will play their part. 2. We have agreed on an Action plan for Growth and Jobs to address short term vulnerabilities and strengthen medium-term foundations for growth. 3. We are determined to strengthen the social dimension of globalization. We firmly believe that employment and social inclusion must be at the heart of our actions and policies. Towards a more stable and resilient International Monetary System 1. We have made progress in reforming the international monetary system to make it more representative, stable and resilient. We have agreed on actions and principles that will help reap the benefits from financial integration and increase the resilience against volatile capital flows. This includes: Coherent conclusions to guide us in the management of capital flows, common principles for cooperation between the IMF and Regional Financial Arrangements, and an action plan for local currency bond markets. We agree that the SDR basket composition should continue to reflect the role of currencies in the global trading and financial system. The SDR composition assessment should be based on existing criteria, and we ask the IMF to further clarify them. To adjust to currencies changing role and characteristics over time, the composition of the SDR basket will be reviewed in 2015, or earlier, as currencies meet the existing criteria to enter the basket. We are also committed to further progress towards a more integrated, even-handed and effective IMF surveillance and to better identify and address spill-over effects.

2. We affirm our commitment to move more rapidly toward more market-determined exchange rate systems and enhance exchange rate flexibility to reflect underlying economic fundamentals, avoid persistent exchange rate misalignments and refrain from competitive devaluation of currencies. 3. We agreed to continue our efforts to further strengthen global financial safety nets and we support the IMF in putting forward the new Precautionary and Liquidity Line (PLL) to provide short-term liquidity to countries with strong policies and fundamentals facing exogenous shocks. We also support the IMF in putting forward a single facility to fulfil the emergency assistance needs of its members. 4. We welcome the euro area's comprehensive plan and urge rapid elaboration and implementation, including of country reforms. We will ensure the IMF continues to have resources to play its systemic role to the benefit of its whole membership. We stand ready to ensure additional resources could be mobilised in a timely manner. Reforming the financial sector and enhancing market integrity

G20: Cannes Summit 1. In Washington in 2008, we committed to ensure that all financial markets, products and participants are regulated or subject to oversight, as appropriate. We will implement our commitments and pursue the reform of the financial system. 2. We have agreed on comprehensive measures so that no financial firm can be deemed too big to fail and to protect taxpayers from bearing the costs of resolution. The FSB publishes today an initial list of Global systemically important financial institutions (G-SIFIs). G-SIFIs will be submitted to strengthened supervision, a new international standard for resolution regimes as well as, from 2016, additional capital requirements. We are prepared to identify systemically important non-bank financial entities. 3. We have decided to develop the regulation and oversight of shadow banking. We will develop further our regulation on market integrity and efficiency, including addressing the risks posed by high frequency trading and dark liquidity. We have tasked IOSCO to assess the functioning of Credit Default Swaps markets. We have agreed on principles to protect financial services consumers. 4. We will not allow a return to pre-crisis behaviours in the financial sector and we will strictly monitor the implementation of our commitments regarding banks, OTC markets and compensation practices. 5. Building on its achievements, we have agreed to reform the FSB to improve its capacity to coordinate and monitor our financial regulation agenda. This reform includes giving it legal personality and greater financial autonomy. We thank Mr Mario Draghi for the work done and we welcome the appointment of Mr Mark Carney, Governor of the Central Bank of Canada as Chairman of the FSB, and of Mr. Philipp Hildebrand, Chairman of the Swiss National Bank as Vice-Chairman. 6. We urge all jurisdictions to adhere to the international standards in the tax, prudential and AML/CFT areas. We stand ready to use our existing countermeasures if needed. In the tax area, we welcome the progress made and we urge all the jurisdictions to take the necessary actions to tackle the deficiencies identified in the course of the reviews by the Global Forum, in particular the 11 jurisdictions identified by the Global Forum whose framework has failed to qualify. We underline the importance of comprehensive tax information exchange and encourage work in the Global Forum to define the means to improve it. We welcome the commitment made by all of us to sign the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and strongly encourage other jurisdictions to join this Convention. Addressing commodity price volatility and promoting agriculture 1. As part of our financial regulation agenda, we endorse the IOSCO recommendations to improve regulation and supervision of commodity derivatives markets. We agree that market regulators should be granted effective intervention powers to prevent market abuses. In particular, market regulators should have and use formal position management powers, among other powers of intervention, including the power to set ex-ante position limits, as appropriate. 2. Promoting agricultural production is key to feed the world population. To that end, we decide to act in the framework of the Action Plan on Food Price Volatility and Agriculture agreed by our Ministers of Agriculture in June 2011. In particular, we decide to invest in and support research and development of agriculture productivity. We have launched the Agricultural Market Information System (AMIS) to reinforce transparency on agricultural products markets. To improve food security,

G20: Cannes Summit we commit to develop appropriate risk-management instruments and humanitarian emergency tools. We decide that food purchased for non-commercial humanitarian purposes by the World Food Program will not be subject to export restrictions or extraordinary taxes. We welcome the creation of a Rapid Response Forum, to improve the international communitys capacity to coordinate policies and develop common responses in time of market crises. Improving energy markets and pursuing the Fight against Climate Change 1. We are determined to enhance the functioning and transparency of energy markets. We commit to improve the timeliness, completeness and reliability of the JODI-oil database and to work on the JODI-gas database along the same principles. We call for continued dialogue annually between producers and consumers on short medium and long-term outlook and forecasts for oil, gas and coal. We ask relevant organizations to make recommendations on the functioning and oversight of price reporting agencies. We reaffirm our commitment to rationalise and phase-out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption, while providing targeted support for the poorest. 2. We are committed to the success of the upcoming Durban Conference on Climate Change and support South Africa as the incoming President of the Conference. We call for the implementation of the Cancun agreements and further progress in all areas of negotiation, including the operationalization of the Green Climate Fund, as part of a balanced outcome in Durban. We discussed the IFIs report on climate finance and asked our Finance Ministers to continue work in this field, taking into account the objectives, provisions and principles of the UNFCCC.

Avoiding protectionism and strengthening the multilateral trading system 1. At this critical time for the global economy, it is important to underscore the merits of the multilateral trading system as a way to avoid protectionism and not turn inward. We reaffirm our standstill commitments until the end of 2013, as agreed in Toronto, commit to roll back any new protectionist measure that may have risen, including new export restrictions and WTOinconsistent measures to stimulate exports and ask the WTO, OECD and UNCTAD to continue monitoring the situation and to report publicly on a semi-annual basis. 2. We stand by the Doha Development Agenda (DDA) mandate. However, it is clear that we will not complete the DDA if we continue to conduct negotiations as we have in the past. We recognize the progress achieved so far. To contribute to confidence, we need to pursue in 2012 fresh, credible approaches to furthering

G20: Cannes Summit negotiations, including the issues of concern for Least Developed Countries and, where they can bear fruit, the remaining elements of the DDA mandate. We direct our Ministers to work on such approaches at the upcoming Ministerial meeting in Geneva and also to engage into discussions on challenges and opportunities to the multilateral trading system in a globalised economy and to report back by the Mexico Summit. 3. Furthermore, as a contribution to a more effective, rules-based trading system, we support a strengthening of the WTO, which should play a more active role in improving transparency on trade relations and policies and enhancing the functioning of the dispute settlement mechanism. Addressing the challenges of development 1. Recognizing that economic shocks affect disproportionately the most vulnerable, we commit to ensure a more inclusive and resilient growth. 2. The humanitarian crisis in the Horn of Africa underscores the urgent need to strengthen emergency and long-term responses to food insecurity. We support the concrete initiatives mentioned in the Cannes final Declaration, with a view to foster investments in agriculture and mitigate the impact of price volatility, in particular in low income countries and to the benefit of smallholders. 3. Recognizing that the lack of Infrastructure dramatically hampers the growth potential in many developing countries, particularly in Africa, we support recommendations of the High Level Panel and the MDBs and highlight eleven exemplary infrastructure projects and call on the MDBs, working with countries involved, to pursue the implementation of such projects that meet the HLP criteria. 4. In order to meet the Millennium Development Goals, we stress the pivotal role of ODA. Aid commitments made by developed countries should be met. Emerging countries will engage or continue to extend their level of support to other developing countries. We also agree that, over time, new sources of funding need to be found to address development needs and climate change. Intensifying our Fight against Corruption 1. We have made significant progress in implementing the Action Plan on combating corruption, promoting market integrity and supporting a clean business environment. We underline the need for swift implementation of a strong international legislative framework, the adoption of national measures to prevent and combat corruption and foreign bribery, the strengthening of international cooperation in fighting corruption and the development of joint initiatives between the public and the private sector. Reforming global governance for the 21st century 1. We welcome the report of UK Prime Minister David Cameron on global governance. We agree that the G20 should remain an informal group. We

G20: Cannes Summit decide to formalise the Troika. We will pursue consistent and effective engagement with non-members, including the UN and we welcome their contributions to our work. 2. We reaffirm that the G20s founding spirit of bringing together the major economies on an equal footing to catalyze action is fundamental and therefore agree to put our collective political will behind our economic and financial agenda, and the reform and more effective working of relevant international institutions. We support reforms to be implemented within the FAO and the FSB We have committed to strengthen our multilateral trade framework. We call on international organisations, especially the UN, WTO, the ILO, the WB, the IMF and the OECD, to enhance their dialogue and cooperation, including on the social impact of economic policies, and to intensify their coordination. On December 1st. 2011, Mexico will start chairing the G20. We will convene in Los Cabos, Baja California, in June 2012, under the Chairmanship of Mexico. Russia will chair the G20 in 2013, Australia in 2014 and Turkey in 2015. We have also agreed, as part of our reforms to the G20, that after 2015, annual presidencies of the G20 will be chosen from rotating regional groups, starting with the Asian grouping comprising of China, Indonesia, Japan and Korea. We thank France for its G20 Presidency and for hosting the successful Cannes Summit.

INTERNATIONAL MONETARY SYSTEM Cannes Summit Final Declaration Building a More Stable and Resilient IMS

Building Our Common Future: Renewed Collective Action For The Benefit Of All 4 November 2011
Since our last meeting:

Global recovery has weakened, particularly in advanced countries, leaving unemployment at unacceptable levels. Tensions in the financial markets have increased due mostly to sovereign risks in Europe. Signs of vulnerabilities are appearing in emerging markets.

G20: Cannes Summit

Global imbalances persist. Increased commodity prices have harmed growth and hit the most vulnerable. Exchange rate volatility creates a risk to growth and financial stability.

Today, we reaffirm our commitment to work together and we have taken decisions to reinvigorate economic growth, create jobs, ensure financial stability, promote social inclusion and make globalization serve the needs of our people. To address the immediate challenges faced by the global economy, we commit to coordinate our actions and policies. We have agreed on an Action plan for Growth and Jobs. Each of us will play their part. Building a More Stable and Resilient International Monetary System
In 2010, the G20 committed to working towards a more stable and resilient IMS and to ensure systemic stability in the global economy, improve the global economic adjustment, as well as an appropriate transition towards an IMS which better reflects the increased weight of emerging market economies. In 2011, we are taking concrete steps to achieve these goals.

Increasing the benefits from financial integration and resilience against volatile capital flows to foster growth and development We agreed on coherent conclusions to guide us in the management of capital flows drawing on country experiences, in order to reap the benefits from financial globalization, while preventing and managing risks that could undermine financial stability and sustainable growth at the national and global levels. To pursue these objectives, we adopted an action plan to support the development and deepening of local currency bond markets, scaling up technical assistance from different international institutions, improving the data base and preparing joint annual progress reports to the G20. We call on the World Bank, Regional Development Banks, IMF, UNCTAD, OECD, BIS and FSB to work together to support the delivery of this plan and to report back by the time of our next meeting about progress made. Reflecting the changing economic equilibrium and the emergence of new international currencies We affirm our commitment to move more rapidly toward more marketdetermined exchange rate systems and enhance exchange rate flexibility to reflect underlying economic fundamentals, avoid persistent exchange rate misalignments and refrain from competitive devaluation of currencies. We are determined to act on our commitments to exchange rate reform articulated in our Action plan for Growth and Jobs to address short term vulnerabilities, restore financial stability and strengthen the medium-term foundations for growth. Our actions will help address the challenges created by developments in global

G20: Cannes Summit liquidity and capital flows volatility, thus facilitating further progress on exchange rate reforms and reducing excessive accumulation of reserves. We agreed that the SDR basket composition should continue to reflect the role of currencies in the global trading and financial system and be adjusted over time to reflect currencies changing role and characteristics. The SDR composition assessment should be based on existing criteria, and we ask the IMF to further clarify them. A broader SDR basket will be an important determinant of its attractiveness, and in turn influence its role as a global reserve asset. This will serve as a reference for appropriate reforms. We look forward to reviewing the composition of the SDR basket in 2015, and earlier if warranted, as currencies meet the criteria, and call for further analytical work of the IMF in this regard, including on potential evolution. We will continue our work on the role of the SDR. Strengthening our capacity to cope with crises As a contribution to a more structured approach, we agreed to further strengthen global financial safety nets in which national governments, central banks, regional financial arrangements and international financial institutions will each play a role according to and within their respective mandate. We agreed to continue these efforts to this end. We recognize that central banks play a major role in addressing liquidity shocks at a global and regional level, as shown by the recent improvements in regional swap lines such as in East Asia. We agreed on common principles for cooperation between the IMF and Regional Financial Arrangements, which will strengthen crisis prevention and resolution efforts.

As a contribution to this structured approach and building on existing instruments and facilities, we support the IMF in putting forward the new Precautionary and Liquidity Line (PLL). This would enable the provision, on a case by case basis, of increased and more flexible short-term liquidity to countries with strong policies and fundamentals facing exogenous, including systemic, shocks. We also support the IMF in putting forward a single emergency facility to provide non-concessional financing for emergency needs such as natural disasters, emergency situations in fragile and postconflict states, and also other disruptive events. We call on the IMF to expeditiously discuss and finalize both proposals. We welcome the euro area's comprehensive plan and urge rapid elaboration and implementation, including of country reforms. We welcome the euro area's determination to bring its full resources and entire institutional capacity to bear in restoring confidence and financial stability, and in ensuring the proper functioning of money and financial markets.

G20: Cannes Summit We will ensure the IMF continues to have resources to play benefit of its whole membership, building on the substantial already mobilized since London in 2009. We stand ready to ensure additional resources could be manner and ask our finance ministers by their next meeting range of various options including bilateral contributions to voluntary contributions to an IMF special structure such as account. its systemic role to the resources we have mobilised in a timely to work on deploying a the IMF, SDRs, and an administered

We will expeditiously implement in full the 2010 quota and governance reform of the IMF. Strengthening IMF surveillance We agreed that effective and strengthened IMF surveillance will be crucial to the efficiency and stability of the IMS. In this context, a strengthening of multilateral surveillance and a better integration with bilateral surveillance will be important, as well as enhanced monitoring of interlinkages across sectors, countries and regions. Against this background, we welcome the recent improvements to the IMF surveillance toolkit including the consolidated multilateral surveillance report and spillover reports and ask the IMF to continue to improve upon these exercises and methodology. We call on the IMF to make further progress towards a more integrated, even-handed and effective IMF surveillance, taking into account the Independent Evaluation Office report on surveillance, covering in particular financial sector, fiscal, monetary, exchange rate policies and an enhanced analysis of their impact on external stability.

We call on the IMF to regularly monitor cross-border capital flows and their transmission channels and update capital flow management measures applied by countries. We also call on the IMF to continue its work on drivers and metrics of reserve accumulation taking into account country circumstances, and, along with the BIS, their work on global liquidity indicators, with a view to future incorporation in the IMF surveillance and other monitoring processes, on the basis of reliable indicators. We will avoid persistent exchange rate misalignments and we asked the IMF to continue to improve its assessment of exchange rates and to publish its assessments as appropriate. While continuing with our efforts to strengthen surveillance, we recognize the need for better integration of bilateral and multilateral surveillance, and we look forward to IMF proposals for a new integrated decision on surveillance early next year. We agreed on the need to increase the ownership and traction of IMF surveillance, which are key components of its effectiveness. We agreed to ensure greater involvement of Ministers and Governors, by providing greater strategic guidance through the IMFC. To increase the transparency of IMF surveillance, we reaffirm the importance of all IMF members to contribute to improve data availability, support the

G20: Cannes Summit Managing Directors proposal to publish multilateral assessments of external balances, and we recommend timely publication of surveillance reports. We welcome the publication of Art. IV reports by most members of the G20 and look forward to further progress. Next steps Building a more stable and resilient IMS is a long-term endeavor. We commit to continue working to ensure systemic stability in the global economy and an appropriate transition towards an IMS which better reflects the increased weight of emerging market economies. In 2012, we will continue to take concrete steps in this direction.

6.1

TAX UPDATES Cannes Summit Final Declaration Tackling tax havens and non-cooperative jurisdictions

We are committed to protect our public finances and the global financial system from the risks posed by tax havens and non cooperative jurisdictions. The damage caused is particularly important for the least developed countries. Today we reviewed progress made in the three following areas: In the tax area - In the tax area, the Global Forum has now 105 members. More than 700 information exchange agreements have been signed and the Global Forum is leading an extensive peer review process of the legal framework (phase 1) and implementation of standards (phase 2). We ask the Global Forum to complete the first round of phase 1 reviews and substantially advance the phase 2 reviews by the end of next year. We will review progress at our next Summit. Many of the 59 jurisdictions which have been reviewed by the Global Forum are fully or largely compliant or are making progress through the implementation of the 379 relevant recommendations. We urge all the jurisdictions to take the necessary action to tackle the deficiencies identified in the course of their reviews, in particular the 11 jurisdictions

G20: Cannes Summit whose framework does not allow them at this stage to qualify to phase 2. We underline in particular the importance of comprehensive tax information exchange and encourage competent authorities to continue their work in the Global Forum to assess and better define the means to improve it. We welcome the commitment made by all of us to sign the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and strongly encourage other jurisdictions to join this Convention. In this context, we will consider exchanging information automatically on a voluntary basis as appropriate and as provided for in the convention; In the prudential area - In the prudential area, the FSB has led a process and published a statement to evaluate adherence to internationally agreed information exchange and cooperation standards. Out of 61 jurisdictions selected for their importance on several economic and financial indicators, we note with satisfaction that 41 jurisdictions have already demonstrated sufficiently strong adherence to these standards and that 18 others are committing to join them. We urge the identified non-cooperative jurisdictions to take the actions requested by the FSB; In the anti-money laundering and combating the financing of terrorism area - In the anti-money laundering and combating the financing of terrorism area, the FATF has recently published an updated list of jurisdictions with strategic deficiencies. We urge all jurisdictions and in particular those identified as not complying or making sufficient progress to strengthen their AML/CFT systems in cooperation with the FATF. We urge all jurisdictions to adhere to the international standards in the tax, prudential and AML/CFT areas. We stand ready, if needed, to use our existing countermeasures to deal with jurisdictions which fail to meet these standards. The FATF, the Global Forum and other international organizations should work closely together to enhance transparency and facilitate cooperation between tax and law enforcement agencies in the implementation of these standards. We also call on FATF and OECD to do further work to prevent misuse of corporate vehicles. 6.2 SECURIY LAW UPDATES Cannes Summit Final Declaration Strengthening the FSB capacity resources and governance The FSB has played a key role in promoting development and implementation of regulation of the financial sector. To keep pace with this growing role, we agreed to strengthen FSBs capacity, resources and governance, building on its Chairs proposals. These include: The establishment of the FSB on an enduring organizational footing: We have given the FSB a strong political mandate and need to give it a corresponding institutional standing, with legal personality and greater financial autonomy, while preserving the existing and wellfunctioning strong links with the BIS;

G20: Cannes Summit The reconstitution of the steering committee: As we move into a phase of policy development and implementation that in many cases will require significant legislative changes, we agree that the upcoming changes to the FSB steering committee should include the executive branch of governments of the G20 Chair and the larger financial systems as well as the geographic regions and financial centers not currently represented, in a balanced manner consistent with the FSB Charter; The strengthening of its coordination role vis--vis other standard setting bodies (SSB) on policy development and implementation monitoring, avoiding any functional overlaps and recognizing the independence of the SSBs We call for first steps to be implemented by the end of this year and will review the implementation of the reform at our next Summit.

MISC. UPDATES Cannes Summit Final Declaration Protecting Marine Environment

Building Our Common Future: Renewed Collective Action For The Benefit Of All 4 November 2011 We decide to take further action to protect the marine environment, in particular to prevent accidents related to offshore oil and gas exploration and development, as well as marine transportation, and to deal with their consequences. We welcome the establishment of a mechanism to share best practices and information on legal frameworks, experiences in preventing and managing accidents and disasters relating to offshore oil and gas drilling, production and maritime transportation. We ask the Global Marine Environment Protection working group, in cooperation with the OECD, the International Regulators Forum and OPEC, to report next year on progress made and to establish this mechanism in order to disseminate these best practices by mid-2012, at which point it will be reviewed. We also commit to foster dialogue with international organisations and relevant stakeholders

G20: Cannes Summit Fostering Clean energy, Green Growth and Sustainable Development We will promote low-carbon development strategies in order to optimize the potential for green growth and ensure sustainable development in our countries and beyond. We commit to encouraging effective policies that overcome barriers to efficiency, or otherwise spur innovation and deployment of clean and efficient energy technologies. We welcome the UN Secretary Generals Sustainable Energy for All initiative. We support the development and deployment of clean energy and energy efficiency (C3E) technologies. We welcome the assessment of the countries current situation regarding the deployment of these technologies as well as the on-going exercise of sharing best practices, as a basis for better policy making. We are committed to the success of the United Nations Conference on Sustainable Development in Rio de Janeiro in 2012. Rio + 20 will be an opportunity to mobilize the political will needed to reinsert sustainable development at the heart of the international agenda, as a long term solution to growth, job creation, poverty reduction and environment protection. A green and inclusive growth will create a broad spectrum of opportunities in new industries and in areas such as environmental services, renewable energy and new ways to provide basic services to the poor.

Pursuing the Fight against Climate Change We are committed to the success of the upcoming Durban Conference on Climate Change on 28 November - 9 December 2011. We support South Africa as the incoming President of the Conference. We call for the implementation of the Cancun agreements and further progress in all areas of negotiation in Durban. We stand ready to work towards operationalization of the Green Climate Fund as part of a balanced outcome in Durban, building upon the report of the Transitional Committee. Financing the fight against climate change is one of our main priorities. In Copenhagen, developed countries have committed to the goal of mobilizing jointly USD 100 billion per year from all sources by 2020 to assist developing countries to mitigate and adapt to the impact of climate change, in the context of meaningful mitigation actions and transparency. We discussed the World Bank IMF OECD regional development banks report on climate finance and call for continued work taking into account the objectives, provisions and principles

G20: Cannes Summit of the UNFCCC by international financial institutions and the relevant UN organizations. We ask our Finance Ministers to report to us at our next Summit on progress made on climate finance. We reaffirm that climate finance will come from a wide variety of sources, public and private, bilateral and multilateral, including innovative sources of finance. We recognize the role of public finance and public policy in supporting climate-related investments in developing countries. We underline the role of the private sector in supporting climate-related investments globally, particularly through various marketbased mechanisms and also call on the MDBs to develop new and innovative financial instruments to increase their leveraging effect on private flows.

Avoiding protectionism and reinforcing the Multilateral Trading System At this critical time for the global economy, it is important to underscore the merits of the multilateral trading system as a way to avoid protectionism and not turn inward. We reaffirm our standstill commitments until the end of 2013, as agreed in Toronto, commit to roll back any new protectionist measure that may have risen, including new export restrictions and WTO-inconsistent measures to stimulate exports and ask the WTO, OECD and UNCTAD to continue monitoring the situation and to report publicly on a semi-annual basis. We stand by the Doha Development Agenda (DDA) mandate. However, it is clear that we will not complete the DDA if we continue to conduct negotiations as we have in the past. We recognize the progress achieved so far. To contribute to confidence, we need to pursue in 2012 fresh, credible approaches to furthering negotiations, including the issues of concern for Least Developed Countries and, where they can bear fruit, the remaining elements of the DDA mandate. We direct our Ministers to work on such approaches at the upcoming Ministerial meeting in Geneva and also to engage into discussions on challenges and opportunities to the multilateral trading system in a globalised economy and to report back by the Mexico Summit.

G20: Cannes Summit Furthermore, as a contribution to a more effective, rules-based trading system, we support a strengthening of the WTO, which should play a more active role in improving transparency on trade relations and policies and enhancing the functioning of the dispute settlement mechanism. We look forward to welcoming Russia as a WTO member by the end of the year.

8.

SOCIAL SECURITY OBLIGATIONS Cannes Summit Final Declaration Development: Investing for Global Growth

Building Our Common Future: Renewed Collective Action For The Benefit Of All 4 November 2011 1. As part of our overall objective for growth and jobs, we commit to maximise growth potential and economic resilience in developing countries, in particular in Low-Income Countries (LICs). Development is a key element of our agenda for global recovery and investment for future growth. It is also critical to creating the jobs needed to improve peoples living standards worldwide. Recognizing that development is a concern and duty to all G20 countries, our Ministers met for the first time on Development in Washington on September 23, 2011.

G20: Cannes Summit 2. We support the report of the Development Working Group, implementing the G20s Seoul Development Consensus for Shared Growth, and call for prompt implementation of our Multi-Year Action Plan. 3. We take actions to overcome the most critical bottlenecks and constraints hampering growth in developing countries. In this regard, we decided to focus on two priorities, food security and infrastructure, and to address the issue of financing for development. 4. The humanitarian crisis in the Horn of Africa underscores the urgent need to strengthen emergency and long-term responses to food insecurity. In accordance with our Multi-Year Action Plan on Food Price Volatility and Agriculture, we: - welcome the initiative of the Economic Community of Western African States (ECOWAS) to set up a targeted regional emergency humanitarian food reserve system, as a pilot project, and the ASEAN+3 emergency rice reserve initiative; - Urge multilateral development banks to finalise their joint action plan on water, food and agriculture and provide an update on its implementation by our next Summit; - Support, for those involved, the implementation of the LAquila Food Security Initiative and other initiatives, including the Global Agriculture and Food Security Program; - Launch a platform for tropical agriculture to enhance capacity-building and knowledge sharing to improve agricultural production and productivity; - Foster smallholder sensitive investments in agriculture and explore opportunities for market inclusion and empowerment of small producers in value chains;
- Support risk-management instruments, such as commodity hedging instruments, weather index insurances and contingent financing tools, to protect the most vulnerable against excessive price volatility, including the expansion of the Agricultural Price Risk-Management Product developed by the World Bank Group (IFC). We ask international organisations to work together to provide expertise and advice to low-income countries on risk-management and we welcome the NEPAD initiative to integrate risk management in agricultural policies in Africa; - Encourage all countries to support the Principles of Responsible Agricultural Investment (PRAI) to ensure sustained investment in agriculture;

- Confirm our commitment to scaling-up nutrition through a combination of direct nutrition interventions and the incorporation of nutrition in all relevant policies. 5. Investing in infrastructure in developing countries, especially in LICs and, whilst not exclusively, with a special emphasis on sub-Saharan Africa, will unlock new sources of growth, contribute to the achievement of the Millennium Development Goals and sustainable development. We support efforts to improve capacities and facilitate the mobilization of resources for infrastructure projects initiated by public and private sectors. 6. We commissioned a High Level Panel (HLP), chaired by Mr Tidjane Thiam, to identify measures to scale-up and diversify sources of financing for infrastructure and we requested the MDBs to develop a joint action plan to address bottlenecks. We welcome both the HLPs report and the MDB Action Plan. In this regard, we support the following recommendations to :

G20: Cannes Summit - Support the development of local capacities to improve supply and quality of projects and make them bankable and enhance knowledge sharing on skills for employment in low income countries. In this regard, we welcome the High Level Panel fellowship program and MDBs efforts to develop and strengthen regional public-private partnerships practitioners networks; - Increase quality of information available to investors, through the establishment of online regional marketplace platforms to better link project sponsors and financiers, such as the Sokoni Africa Infrastructure Marketplace, and the extension of the Africa Infrastructure Country Diagnosis, which aim at benchmarking infrastructure data; - Prioritize project preparation financing, encouraging the MDBs to dedicate a greater share of their funds to preparation facilities that can operate on a revolving basis and call on MDBs to improve effectiveness of the existing preparation facilities; - Contribute to building an enabling environment for private and public infrastructure financing, especially for regional projects. We support increased transparency in the construction sector, the review of the Debt Sustainability Framework taking into account the investment-growth nexus. We call on MDBs to harmonize their procurement rules and practices and we support move towards mutual recognition of procedures and eligibility rules; - Improve access to funding, notably through the strengthening of local intermediaries and financial markets, more effective use of MDBs capital, including through use of credit enhancement and guarantee instruments. 7. We commissioned the HLP to establish criteria to identify exemplary investment projects in cooperation with multilateral development banks. We highlight the 11 projects mentioned in the HLP report annexed to this Declaration, which have the potential to have a transformational regional impact by leading to increased integration and access to global markets, with due consideration to environmental sustainability. We call on the MDBs, working with countries involved and in accordance with regional priorities (in particular the Program for Infrastructure Development in Africa), to pursue the implementation of such projects that meet the HLP criteria and to prioritize project preparation financing, notably the NEPAD Infrastructure Projects Preparation Facility. 8. We stress the importance of following-up on these concrete actions and invite MDBs to provide regular updates on the progress achieved. 9. Recognizing that economic shocks affect disproportionately the most vulnerable, we commit to ensure a more inclusive and resilient growth. We therefore decide to support the implementation and expansion of nationally-designed social protection floors in developing countries, especially low income countries. We will work to reduce the average cost of transferring remittances from 10% to 5% by 2014, contributing to release an additional 15 billion USD per year for recipient families. 10. Recognizing that 2.5 billion people and millions of Small and Medium Enterprises (SMEs) throughout the world lack access to formal financial services, and the crucial importance for developing countries to overcome this challenge, we launched in Seoul an ambitious Global Partnership for Financial Inclusion (GPFI). We commend the ongoing work by the GPFI to foster the development of SME finance and to include financial inclusion principles in international financial standards. We endorse the five recommendations put forward in its report, annexed to this Declaration, and commit to pursue our efforts under the Mexican Presidency.

G20: Cannes Summit 11. We welcome the presentation of the report by Mr Bill Gates on financing for development. We recognize the importance of the involvement of all actors, both public and private, and the mobilisation of domestic, external and innovative sources of finance. 12. Consistent with the Multi-Year Action Plan agreed in Seoul, we strongly support developing countries mobilization of domestic resources and their effective management as the main driver for development. This includes technical assistance and capacity building for designing and efficient managing of tax administrations and revenue systems and greater transparency, particularly in mineral and natural resource investment. We urge multinational enterprises to improve transparency and full compliance with applicable tax laws. We welcome initiatives to assist developing countries, on a demandled basis, in the drafting and implementation of their transfer pricing legislation. We encourage all countries to join the Global Forum on Transparency and exchange of information in tax purposes. 13. We stress the pivotal role of ODA. Aid commitments made by developed countries should be met. Emerging G20 countries will engage or continue to extend their level of support to other developing countries. We welcome the emphasis on ensuring that poor countries benefit rapidly from innovation and technological advances, and agree to encourage triangular partnerships to drive priority innovations forward. We commit to raise the quality and efficiency of aid by concentrating on the highest impact interventions and increase the focus on concrete results and overall impact on development. 14. We agree that, over time, new sources of funding need to be found to address development needs. We discussed a set of options for innovative financing highlighted by Mr Bill Gates, such as Advance Market Commitments, Diaspora Bonds, taxation regime for bunker fuels, tobacco taxes, and a range of different financial taxes. Some of us have implemented or are prepared to explore some of these options. We acknowledge the initiatives in some of our countries to tax the financial sector for various purposes, including a financial transaction tax, inter alia to support development. 15. We welcome the upcoming 4th High-Level Forum on aid effectiveness to be held in Busan, Korea (29 November-1st December 2011). The Forum will be an opportunity to establish a more inclusive partnership to address development effectiveness. 16. We look forward to a successful replenishment of the Asian Development Fund and of the International Fund for Agriculture Development. Intensifying our Fight against Corruption 1. Corruption is a major impediment to economic growth and development. We have made significant progress to implement the G20 Anti-Corruption Action Plan. We endorse our experts report, annexed to this Declaration, which outlines the major steps taken both by individual countries and the G20 collectively, and sets out further actions required to ensure that G20 countries continue to make positive progress against the Action Plan. 2. In this context: - We welcome the ratification by India of the United Nations Convention against Corruption (UNCAC). We also welcome the decision made by Russia to join the OECD Convention on Combating Bribery of Foreign Public Officials

G20: Cannes Summit in International Business Transactions. We commit to accelerate the ratification and implementation of UNCAC and to have a more active engagement within the OECD Working Group on Bribery on a voluntary basis. We further commend the member countries which are taking steps in the spirit of the Action Plan; - We commend the first reviews on the implementation of UNCAC. We commit to lead by example in ensuring the transparency and inclusivity of UNCAC reviews by considering the voluntary options in accordance with the Terms of Reference of the Mechanism, notably with regards to the participation of civil society and transparency; - We support the work of the Financial Action Task Force (FATF) to continue to identify and engage those jurisdictions with strategic Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) deficiencies and update and implement the FATF standards calling for transparency of cross-border wires, beneficial ownership, customer due diligence and enhanced due diligence; - We agree on a work program which includes a framework for asset recovery, building on the World Banks Stolen Asset Recovery (StAR) Initiative, whistle-blowers protection, denial of entry to corrupt officials and public sector transparency, including fair and transparent public procurement, with concrete results by the end of 2012. 3. We welcome initiatives aimed at increasing transparency in the relationship between private sector and government, including voluntary participation in the Extractive Industries Transparency Initiative (EITI). We also acknowledge the steps taken by some of us to request companies in the extractive industry to publish what they pay in countries of operation and to support the Construction Sector Transparency Initiative (CoST). 4. We commend the enhanced engagement of the private sector to fight against corruption. We welcome the commitments by the B20 to build on our Action Plan and urge them to take concrete action. 5. We hold ourselves accountable for our commitments and will review progress at our next Summit. Governance 1. We welcome the report of UK Prime Minister David Cameron on global governance. 2. As our premier Forum for international economic cooperation, the G20 is unique in bringing together the major economies, advanced and emerging alike, to coordinate their policies and generate the political agreement necessary to tackle the challenges of global economic interdependence. It is a Leader-led and informal group and it should remain so. The G20 is part of the overall framework of international governance. 3. We agree that, in order to strengthen its ability to build and sustain the political consensus needed to respond to challenges, the G20 must remain efficient, transparent and accountable. To achieve this, we decide to: - Maintain our focus on the broad global economic challenges;

G20: Cannes Summit - Bolster our ability to deliver our agenda and work program effectively. We decide to formalise the Troika, made of past, present and future Presidencies to steer the work of the G20 in consultation with its members. We ask our Sherpas to develop working practices for the G20 under the Mexican Presidency; - Pursue consistent and effective engagement with non-members, regional and international organisations, including the United Nations, and other actors, and we welcome their contribution to our work as appropriate. We also encourage engagement with civil society. We request our Sherpas to make us proposals for the next meeting. 4. We reaffirm that the G20s founding spirit of bringing together the major economies on an equal footing to catalyse action is fundamental and therefore agree to put our collective political will behind our economic and financial agenda, and the reform and more effective working of relevant international institutions. 5. On December 1st. 2011, Mexico will start chairing the G20. We will convene in Los Cabos, Baja California, in June 2012, under the Chairmanship of Mexico. Russia will chair the G20 in 2013, Australia in 2014 and Turkey in 2015. We have also agreed, as part of our reforms to the G20, that after 2015, annual presidencies of the G20 will be chosen from rotating regional groups, starting with the Asian grouping comprising of China, Indonesia, Japan and Korea. Details of the regional groups are attached. 6. We thank France for its G20 Presidency and for hosting the successful Cannes Summit

9.

KNOWLEDGE RESOURCE Key outcomes of G20 Cannes summit

Following are the main achievements of the Group of 20 heads of state summit in Cannes, France, on November 3-4. * IMF/EU Supervision of Italy Economic Reforms Italy agreed to have the International Monetary Fund monitor its progress on a quarterly basis. The IMF said a team would go to Italy by end-November and said the conclusions of its regular and independent monitoring of Italy would be published. * IMF Resources Broad agreement to ramp up the IMF's warchest to help stop euro zone contagion plunging the world back into recession: No numbers were fixed, but countries such as Britain, China and Australia said they were ready to inject new funds into the IMF, either through bigger quotas or through additional money for the IMF's New Agreements to Borrow (NAB) crisis fund. The NAB has to

G20: Cannes Summit be reauthorized every six months by the IMF executive board, the last time being in September. IMF chief Christine Lagarde said there would be no cap or floor on new resources. Separately, there are discussions about boosting global liquidity by allocating IMF Special Drawing Rights to every member country, which boost their national reserves, as was done in 2009. Furthermore, euro zone members are discussing possibly pooling their SDRs to build a fighting fund that could support vulnerable peripherals such as Italy and Spain. * Foreign Exchange Policy
Agreement to move "more rapidly" toward market-determined exchange rate systems and enhance forex flexibility to reflect underlying fundamentals and avoid competitive devaluations: The final communique mentions China by name for the first time in the context of greater currency flexibility and said it "welcomed China's determination" to increase forex flexibility. * Capital Controls Agreement on guidance for the management of capital flows with the aim of preventing and controlling risks that could undermine financial stability and sustainable growth. An action plan supports developing local currency bond markets, scaling up technical assistance from international institutions, improving data bases and preparing progress reports to the G20.

* Action Plan for Jobs, Growth Under a package to reinvigorate growth and employment, the United States commits to timely near-term measures to sustain economic recovery. Australia, Brazil, Canada, China, Germany South Korea and Indonesia agree to let automatic fiscal stabilizers work and support domestic demand. Emerging economies that are in surplus pledge to move toward domesticled growth. Italy pledges to bring its budget "close to balance" in 2013. * Financial Regulation Agreement to strengthen regulation and oversight of the shadow banking system, endorse the Financial Stability Board's initial 11 recommendations and develop them in 2012. Commitment to implement IOSCO measures to address risks posed by high-frequency trading and so-called "dark liquidity." Request to IOSCO to assess by the G20's next summit the functioning of credit default swap markets and their role in asset pricing. * Banks

G20: Cannes Summit

The G20 named 29 banks as being so important to the global financial system that they are likely to need to hold more capital than rivals and must put in place a plan to let them be wound up without taxpayer help were they to hit trouble. Of the list of so-called SIFIs, 17 are from Europe, eight are U.S. banks, including Goldman Sachs, JP Morgan and Citigroup, and four are from Asia, including Bank of China. * Effort to Curb Commodity Price Volatility Agreement to boost agricultural output and tackle food price volatility to meet growing demand from a world population expected to reach 9 billion people by 2050. France won backing for its proposal to limit commodity futures positions of big investors as a way to crack down on speculation. France had also sought tighter regulation of physical commodity trading. * Tax on Financial Transactions No agreement on the creation of a global tax on although France will now push the idea of a panEuropean Commission. Opposition to the idea remains United States would not stand in the way of a European block any push for a global tax. financial transactions, European tax via the widespread although the tax and Brazil would not

* Tax Havens Agreement to a multilateral convention to tackle tax evasion more effectively that includes automatic exchange of information and tax collection assistance. The convention also imposes safeguards to protect confidentiality of information.

* SDR Agreement that the IMF's SDR basket composition adjusted over time to reflect the changing nature of review of the basket set for 2015 and a request made to further clarify current entry criteria. should be currencies, with a the IMF to

* International Monetary System

G20: Cannes Summit

No tangible progress on a long-term G20 goal to work toward a more stable and resilient IMF that would better reflect the increased weight of emerging markets, but the group affirmed a will to take concrete steps on this front.

Without Any Concrete Plans on the Table, The Cannes Summit is beimg Termed as a Failure Making the Possibility of a Second Recession More Real Than Ever Before

www.mi7safe.org

G20: Cannes Summit Alka Agarwal

Alka Agrawal Managing Trustee Mi7

Financial Literacy Mission

A crash course of financial literacy

Missions Seven Charitable Trust

120/714, Lajpat Nagar, Kanpur - 208005 Phone 0512-2295545, 9450156303, 9336114780 E-mail at: safe@mi7safe.org Financial Advisor Practice Journal November 2011 Volume 66 G20: Cannes Summit Co-Editor: Ankur Agrawal