MADISON, Wis.—As finance ministers from the Group of 20 (G-20) nations prepare for this week's summit in Pittsburgh, Pa., World Council of Credit Unions (WOCCU) leadership hopes the gathering will consider credit unions' point of view more than it has in the past. Despite success in reaching other international regulatory bodies, WOCCU does not feel the G-20 has effectively utilized input from the global financial cooperative movement, according to a letter from Pete Crear, WOCCU president and CEO, to the G-20 leaders.
"While we recognized the need for the G-20 governments to act rapidly over the past year, we have been disappointed by the lack of consultation in the process," Crear wrote. "We hope that greater consultation with all parts of the financial sector will occur as the reform process continues."
This week's G-20 Summit in Pittsburgh, a location chosen by U.S. Pres. Barack Obama because of the area's strong economic recovery, will review the progress made since the Washington D.C. Summit in November 2008 and London Summit, held this past April. Plans include outlining further actions to assure a sound and sustainable recovery from the global economic crisis.
Crear's letter commented on several areas that will come under discussion by summit attendees, the finance ministers and central bank governors of 19 nations and the European Union. WOCCU largely applauds and supports the G-20 efforts to date, particularly as they relate to capital adequacy, liquidity needs and executive compensation. The organization hopes that greater distinction will be made between large, complex international banks and retail cooperative financial institutions in designing new guidelines, Crear's letter said.
"We agree that retained earnings should be the cornerstone of capital bases," Crear wrote, "but the rules for non-joint stock firms, such as financial cooperatives, must also recognize the importance of access to additional forms of capital."
Crear urged the G-20 ministers to support improved access to liquidity, clearing and settlement systems for credit unions in both developed and developing countries. In addition, financial institution executive compensation should be tied to meeting long-term performance goals in an effort to assure that consumers' wellbeing is not compromised by bankers in pursuit of pay bonuses, he adds.
"Finally, as the implementation of regulatory reforms proceeds, we favor a gradual process to allow sufficient time for changes to be communicated," Crear wrote. "This will help organizations and institutions work through the ongoing aftermath of the economic crisis."
Established in the wake of the emerging markets financial crisis of the late 1990s, the G-20 is an informal forum that promotes open and constructive discussion between industrial and emerging-market countries on key issues related to global economic stability. The G-20 includes Argentina, Australia, Brazil, Canada, China, France, Germany, Great Britain, India, Indonesia, Italy, Japan, Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United States and the European Union. In G-20 countries, financial cooperatives serve 637 million people and have more than US$9 trillion in assets.
The letter was submitted to G-20 finance ministers on Sept. 22 and follows past communications that WOCCU has had with G-20 leaders prior to the Washington and London Summits. The letter may be viewed in its entirety at www.woccu.org/documents/WOCCU_letter_to_G-20_Sept09. For more information on the summit itself, go to www.pittsburghg20.org.
World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 57,000 credit unions in 103 countries serve 208 million people. Learn more about World Council's impact around the world at www.woccu.org.