On Wednesday night, President Obama will leave to join his increasingly stressed fellow heads of state at the Cannes G-20 summit. FedFin has reviewed the official agenda, the informal work plan and the expectations of key participants to provide clients a preview of anticipated G-20 action on financial-industry matters. In response to the Greek bombshell regarding a referendum, the G-20 formal agenda is in tatters, with much of the session focusing on closed-door efforts to get the Chinese and other non-Eurozone nations to contribute to the European Financial Stability Facility (EFSF). The U.S. has been privately debating the political and foreign-policy implications of standing behind China, but fiscal and political problems have apparently led the U.S. delegation to agree reluctantly to do so. EU leaders are focusing on the EFSF as a top-order priority because it is increasingly apparent that only a robust sovereign guarantee will create a “firewall” against contagion risk. Reflecting this, the IMF may announce a new sovereign “line-of-credit” facility to reassure markets that will remain skeptical even if the EFSF gets off the ground.
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