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The world economy -- huge, complex and divided by competing national interests -- is a difficult thing to manage even in the best of times. Amid a global financial downturn the task becomes even harder, although the need is all the greater so nations may work together to develop policies to restore growth, and the trade and jobs that will follow.
President Barack Obama and the heads of 20 of the world’s largest economies took a big step toward guaranteeing this kind of cooperation at a summit last week in Pittsburgh, Pennsylvania. The group adopted a framework for sustainable economic growth, and also took steps to prevent a repeat of the problems and mistakes that have caused the worst economic downturn since the Great Depression of the 1930s.
To accomplish this, rising economic powers such as China, India and Brazil will have a greater role in decision-making when world leaders meet to discuss economic issues in the future. That’s a change from the tradition of putting such decisions before the leaders of the G-8, a group of eight of the world’s richest nations, most of them in the West.
"We have reformed our international economic architecture so we can better coordinate our effort to meet the challenges of the 21st century," President Obama said.
The agreement tightens rules governing how banks and other financial institutions operate, and calls for those organizations to keep larger financial reserves to cover losses from bad loans and failed investments. Missteps by bankers and lax oversight of them pushed millions of people into unemployment and cost trillions of dollars in lost wealth.
In recent weeks the economic picture has improved, but there is a long way to go before the recovery is complete. The G-20 leaders pledged to continue their stimulus and regulatory efforts for the immediate future, a shared commitment to sustain the signs of recovery and growth.