The Group of 20 and its contribution to the reform of the global financial architecture

Abstract

The 2008 global financial crisis prompted an extensive re-evaluation of the effectiveness, legitimacy and relevance of the institutions that governed the global economy since the end of the Second World War. This re-evaluation resulted in various attempts to improve the formal and informal structures of global financial governance in order to avoid similar shortcomings in the future. As a result, the G20 developed from a mere suggestion at a G7 Summit in 1999 into a significant society of states ranging from highly developed states to developing states. The G20 is a deliberative forum representing 19 of the world’s leading industrialised and emerging economies and the European Union. Global financial instability resulting from the 1997-1998 Asian financial crisis triggered the establishment of the G20 and informed its mandate to promote international financial stability. Consequently, the G20 became the key agent for the reform of the international financial architecture and has been described as an international steering committee, a premier forum and a cornerstone for international financial cooperation. This study is grounded in the constructivists’ assumption that the international environment should be explained as a social structure constructed by a normative framework. This non-material framework provides both agents (actors, such as, but not limited to, states) and the material environment social identity and legitimacy. Crises in the material environment, however, can result in new identities, interests and norms, a new normative platform for the reform of the system. This study found that the G20, represented by members from the global North and the global South, focused on the reform of the IMF, overseer of global financial processes. Yet, a main finding in this study is that the urgency to reform the IMF disappeared as new global issues emerged on the global agenda. This study also asks how the G20 can become a more effective global actor, an agent of long-term change driven by shared understandings and new norms to ensure the reform of the global financial architecture to increase its stability.