In this report, FedFin assesses the weekend’s G-20 summit of finance ministers and central bankers, which as anticipated concluded with the U.S. and BRIC nations refusing EU demands for more aid from the IMF. This has led yet again to uncertain prospects in the Eurozone, with the summit communiqué going farther than Germany wished in demanding that Euro nations provide sufficient support for a robust “firewall.” The communiqué is vague or silent on other critical issues at the summit, most notably work to sanction Iran and, now, Syria. Secretary Geithner took heavy fire over the Volcker Rule, with other nations suggesting progress was made even as the U.S. delegation continued its noncommittal stand on the preferential treatment proposed for USG obligations. Mr. Geithner also emphasized the U.S. commitment to consistent financial reforms around the globe. This generic commitment reflects continued strong pressure on the U.S. to implement the Basel rules, pressure that will complicate industry efforts to win delay on the rewrite of the Basel II.5 rules (see FSM Report RATINGS48). However, it does reinforce the push for consistent risk weightings set for action in early March by the Basel Committee.
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