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People, planet, prosperity: The Italian G20 Finance track

 
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G20 Italy

People, planet, prosperity: The Italian G20 Finance track

Finance Track meetings

About the G20

The G20 is the international forum that brings together the world’s major economies. The forum has met every year since 1999 and includes, since 2008, a yearly Summit, with the participation of the respective Heads of State and Government.

Economic growth, productivity, climate, infrastructure, international taxation to financial inclusion, financial stability and support to the most fragile economies are the main priorities of G20.

The G20 groups the G7 countries plus: Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Turkey, Saudi Arabia, South Africa, South Korea and the European Union. They are joined by some international organizations, namely: the International Monetary Fund, the World Bank, the Organisation for Economic Co-operation and Development, the Financial Stability Board and the United Nations. Each year, a selected number of guest members is invited to take part to guarantee a broader geographical participation.

The Italian G20 Presidency

On 1 December 2020, Italy took over the Italian G20 Presidency from Saudi Arabia. It is the first time our Country is called upon to lead this international forum bringing together the world’s most prominent economies. This represents a formidable challenge, in particular in a year where the global economy needs to recover after the devastating impact brought about by the Covid-19 crisis.

In 2021, in spite of persisting uncertainties on the evolution of the pandemic, the global economy is expected to bounce back from the deepest recession since World War II. Still, the legacy of the crisis will weigh on our economies and societies for the years to come.

It is against this backdrop that the Italian Presidency will steer and encourage global policy makers to continue their efforts to overcome the pandemic, foster a sustainable, balanced and inclusive recovery and ensure that the world is better prepared to cope with unforeseen shocks.

At the same time, we should not settle for a return to normal. The aim of the Italian Presidency is to contribute to developing a shared vision to shape a brighter future for all.

The vision proposed by the Italian Presidency will be structured on three pillars:

  • People: All policy actions will be centred on people, so that no one is left behind. This means tackling inequalities and promoting equal opportunities in health, education, employment and human development, starting by the most vulnerable groups.
  • Planet: To build more resilient societies, we cannot underestimate the risks our planet is facing. Developing a safer and more sustainable world requires restoring the balance between people and nature. Our commitments to the Paris Agreement and the Sustainable Development Goals can no longer be postponed.
  • Prosperity: Global growth should be seen as a tool to ensure prosperity for all. New technologies and the digital transformation are formidable drivers of prosperity and better quality of life. The international community should strive to make digitalisation an opportunity for all.

The Finance Track

Although throughout the years G20 discussions expanded their area of interest, economic issues remain at the core of its work.

Finance Track
The Finance Track. Full details

The Finance Track gathers G20 Finance Ministers and Central Bank Governors to discuss global economic, fiscal and monetary issues. They work closely with the International Monetary Fund in relation to international economic cooperation and with the Financial Stability Board on global financial stability and risk mitigation via information exchanges. Main issues cover global economy, sustainable and inclusive growth and financial regulation.

Within this framework, in connection with the 3Ps priorities of the Italian G20 Presidency, the Finance Track will aim to bridge the efforts to sustain the recovery with the development of long-term strategies to promote and accompany the transformation towards greener, more digital and inclusive societies. Yet, reaching this ambitious goal requires global economies to join forces. This is why Italy looks at a revamped multilateralism and at the wide engagement of all actors as the guiding principles of international cooperation.

Shared solutions

The aim of the Italian Presidency will be to find shared solutions to:

Ensure health as a global common good and strengthen pandemic preparedness
Ensure health as a global common good and strengthen pandemic preparedness

The international community should renew efforts until the pandemic is eradicated. In our interconnected planet, public health should be seen as a global common good. The Italian Presidency will pursue this principle and promote adequate investment and universal access to health. The Finance Ministers will continue to cooperate closely with Health Ministers, with a view to strengthening the resilience, inclusiveness and response capacity of health systems.

Going beyond the fight to this pandemic, we shall make sure that future generations are better prepared against similar shocks. The Italian Presidency will strive to take collective actions to improve pandemic preparedness and response.

Promote an international environment conducive to investment and growth
Promote an international environment conducive to investment and growth

Delivering a coordinated global response is crucial for a prompt and balanced recovery. Adequate investment in health systems that can provide universal access to health services is crucial to overcome the current crisis and strengthen economic resilience and growth in the long term.

Looking forward, we should bear in mind that the crisis broke out in a context of declining global growth and productivity. Technological change also brings about new challenges for social inclusion, regional cohesion and equality. Making sure that nobody is left behind along the path to more digital and innovative societies will be a key priority. Investment in digital and green innovations should be seen as mutually reinforcing tools, with the potential of triggering a virtuous process of stimulating the global economy, creating jobs and generating long-term savings.

Investment in quality infrastructures plays a critical role to spur economic recovery and set the ground for a sustainable and inclusive growth. This crisis has shown to what extent reliable and high-quality infrastructure systems are critical to respond to unexpected external shocks and to deliver quality services to the entire population. This applies to the health sector (including access to water and sanitation), as well as to telecommunications, digital connectivity and logistics.

The Italian Presidency aims to promote infrastructures — including digital ones — as a way to foster social inclusion, reduce geographical disparities and improve environmental sustainability. Investment in infrastructure should not be limited to new large-scale projects. Good practices at local level should be encouraged. Similarly, maintaining and optimising existing assets should be given high priority.

Maintain global financial stability
salute
Maintain global financial stability

A strong recovery critically relies on the ability of the global financial system to provide financing to the real economy while managing heightened risks to financial stability. The Italian Presidency will build on the coordinated response enacted in 2020 to promote a smooth transition towards the post-Covid-19 world and develop a shared understanding on how to ensure growth and financial stability in the longer term.

In particular, we will prioritize initiatives aimed at reviewing the lessons learned from the pandemic shock, with a view to possibly adapting the global financial rules and standards, coordinating the preparations for the exit from the emergency support measures and enhancing the resilience of non-bank financial intermediation. Beyond the pandemic, we will give priority to other important initiatives including renewed efforts to fight money laundering and terrorist financing, building more efficient and secure cross-border payment infrastructures and arrangements, strengthening cybersecurity in the financial sector and further analysing the regulatory, supervisory and oversight challenges raised by global stablecoins arrangements and remaining financial stability concerns.

The financial sector also plays a key role in accompanying the transition towards sustainable growth. The Italian Presidency will step up initiatives to enhance the resilience of the overall financial system, in particular against climate-related financial stability risks, including by ensuring better quality data and more comparable climate-related financial disclosure.

The Covid-19 has also contributed to shedding light on the opportunities and challenges linked to the spread of digitalised financial services. The growing role of digitalization, accelerated by the pandemic, has the potential to improve financial access for underserved and vulnerable groups and small and medium enterprises, but might be a source of exclusion for some categories, due to the lack of digital infrastructure and/or digital skills. Under the Italian Presidency, the Global Partnership for Financial Inclusion has identified two main areas of intervention. The first one deals with digital and financial “awareness”, to be enhanced to narrow down the gaps in the weakest sections of the population and vulnerable firms. The second one concerns the establishment of an “inclusive” regulatory and supervisory framework, which looks at financial inclusion as an objective and ensures that customer are better protected against the risks posed by an increased use of digital means.

Support vulnerable economies and strengthen the international financial architecture
Support vulnerable economies and strengthen the international financial architecture

The Covid-19 crisis has put a strain on the financing needs of the most vulnerable economies and risks jeopardising development prospects, after a decade of progress in reducing poverty, including in African countries. The international community adopted several initiatives to help address the immediate liquidity needs and balance of payments’ difficulties for the most vulnerable countries. Yet, these efforts are not always sufficient to create enough fiscal space to cope with the crisis and secure debt sustainability for the most leveraged borrowers. Overall, a new Special Drawing Rights allocation on a large scale would help boost global reserves and support countries with foreign exchange difficulties.

Building on the works of the International Financial Architecture Working Group, the Italian Presidency will also favour a gradual shift from the provision of emergency liquidity to address the longer-term financing needs of low-income countries, while pursuing the Sustainable Development Goals. Financing alone, however, would not solve all problems. It is important that the impact and coordination of the donor community, in particular the Multilateral Development Banks, is maximized to help low-income countries to make the most of the resources they receive.

The Italian Presidency will also renew efforts to foster the resilience of the international monetary system. Looking forward, technological and digital development is also set to reshape the international monetary system. The G20 shall promote a reflection on the potential macro-financial impact of the cross-border use of digital currencies and the implications for reserve currencies.

Make the international tax system fairer and more transparent
Make the international tax system fairer and more transparent

A fairer and more sustainable international taxation system is key to promoting global trust. Expectations are high on G20 members to agree on international rules capable of creating a more efficient and certain tax system and supporting an inclusive and sustainable recovery. The Italian Presidency will strive to meet these expectations and will aim to reach a comprehensive agreement on the taxation of digital economy and on the definition of a global minimum effective taxation, based on the work already carried out by the OECD. Moreover, continuity will be given to other work streams on international taxation. Monitoring the effective implementation of anti-avoidance measures, especially the Base Erosion and Profit Shifting minimum standards agreed by more than 135 countries, is crucial to stop strategies exploiting gaps and mismatches in tax rules to avoid paying tax. Fighting tax evasion is another key priority. In the area of tax transparency, the Italian Presidency intends to endorse the extension of the automatic exchange of information to crypto-assets and, potentially, to non-financial assets. Finally, global policy makers cannot ignore the potential of taxation in supporting the green transition. Italy will foster a debate on the role of taxation in protecting the environment, promoting a more efficient use of energy sources, reducing pollution and ultimately supporting a more sustainable growth.

Protecting our planet while improving living conditions for all
Protecting our planet while improving living conditions for all

An ambitious Green Agenda will be at the core of the Italian G20 Presidency. Italy believes that the international commitments to address climate change and environmental degradation can no longer be postponed. Our Presidency will promote the fair transition towards modern, resource-efficient and competitive economies, also in line with the path set at the European level with its new Green Deal. This will be a cross-cutting priority across all the Finance Track activities, ranging from the inclusion of environmental risks in macroeconomic risks analyses, to the impact of green investment on productivity, to the potential of nature-based solutions applied to infrastructures. The Italian Presidency will also endeavour to open a debate and make progress on a number of sensitive yet crucial topics, such as sustainable finance and environmental taxation.

Ministerial meetings

Each G20 Presidency includes the organization of ministerial meetings on each of the main focus areas of the forum. These meetings are important opportunities to discuss and further develop issues of international relevance, thus building consensus around specific shared deliverables.

In 2021, four meetings of the Finance Ministers and Central Bank Governors will be held under the Italian Presidency. These will be paired by five Deputies’ official meetings. The first Deputies’ meeting was held on January 25, 2021, and the first G20 Finance Ministers and Central Bank Governors meeting was held on Friday 26 February 2021. Both events took place in virtual mode.

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