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EASTASIAFORUM Economics, Politics and Public Policy in East Asia and the Pacific Vol.2 No.4 October-December 2010 $9.50 Quarterly Asia and the G20 Il SaKong The Seoul Summit: agenda and implications Takatoshi Ito Towards a new world financial architecture Peter Drysdale and Soogil Young Asia’s responsibilities Jeffrey Frankel Leadership need not only come from the G7 Suman Bery Reforming the global monetary system Barry Eichengreen The elephant in the exchange rate room Yiping Huang Steps to global rebalancing and more . . . EASTASIAFORUM Quarterly ISSN 1837-5081 (print) ISSN 1837-509X (online) From the Editor’s desk The establishment of the G20 is a change to the international system of an order that can be compared with the establishment of the great postwar international institutions. The G20 is now the premier forum for global economic governance following its elevation to leaders’ level meetings after the global financial crisis. The United States has led a smooth transition in the locus of power from the G7/8 to the G20. The membership of the G20 is recognition of the importance of Asia in the global system. Now that Asia has this global platform, can it deliver on its global responsibilities? This issue of the Quarterly presents contributions from across the region to address some of the big questions that face Asia in the G20. There are clearly Asian interests in the G20, although the region brings diverse perspectives and agendas to the global table, as it should. And how well Asian members of the G20 can project broader regional interests and engage non-member support for those interests and agendas is another question. The legitimacy of the process will ultimately depend on getting the answer to that question right. But there is resolve in Asia to make the G20 work, since there is a collective Asian interest that this global initiative succeed and continue. That encourages the G20’s Asian members to define a constructive agenda through which to contribute to the international public good. The spotlight is on Korea as the first Asian and newly emerged economy to host the G20. The remarkable achievement of the G20 in helping to steer the global economy out of the worst of the financial crisis thus far has consolidated its global role. But many risks remain. The global economy remains unbalanced, because there is imbalance in major economies themselves. The way out is difficult and requires important structural adjustments at home for most countries. Asia can help to lead by example. Asia can help the world by helping itself in advancing vigorous structural and financial reform, strengthening domestic safety nets, rebalancing growth and showing leadership and flexibility on policies that affect others, including on exchange rates, as well as by promoting global institutional reform, for example, within the International Monetary Fund and World Trade Organisation. Shiro Armstrong www.eastasiaforum.org 2 E A S T A S I A F O R U M Q U A R T E R LY O C T O B E R - D E C E M B E R 2 0 1 0 CONTENTS 4 Il sakong The Seoul Summit: agenda and implications 6 wendy dobson Catch-22 for the G20 8 takatoshi ito Towards a new world financial architecture 11 mahendra siregar and tuti w. irman The global agenda: a bigger role for Asia 13 barry carin and peter heap Asians can think: a time for Asian leadership 15 peter drysdale and soogil young Recovery and growth: the opportunity for Asia in the G20 18 andrew elek A testing time for the G20 21 gary hawke Consensus, compliance and the limits of legitimacy 23 ishrat husain Providing a voice to ‘excluded’ nations 25 jeffrey frankel Leadership need not only come from the G7 27 peter drysdale Asia’s global responsibilities 29 yiping huang How should the G20 help global rebalancing? 32 barry eichengreen China’s exchange rate: the elephant