The G7 employs external and internal accountability but struggles to utilize implementation experiences for policy-making. Its reports are not used for decision-making, hindering effectiveness. This paper proposes enhancing G7 accountability to foster learning and legitimacy by ensuring commitments are clear and regularly tested against experiences. Improved follow-up could engage external stakeholders better.
Excessive imbalances between countries’ current accounts are significant for two main reasons. Firstly, they create contention among G20 countries, which use these imbalances to pressure others into changing policies and justifying unilateral trade measures, complicating consensus on critical issues. Secondly, such imbalances often lack sound economic justification, indicating a malfunctioning global economic system that fails to convert available funds from savings, credit, or monetary expansion into consumption and productive investment. Accumulation arises from various factors, including uncertainty, inequality, and ageing, which limit consumption, while overcapacities and technological changes restrict productive investment. The financial system struggles to differentiate between productive and non-productive uses of funds. Typically, downward revaluations and bankruptcies would reduce financial resources not directed towards consumption or production. However, vested interests and easy monetary conditions hinder this correction, contributing to crises like the 2008 global financial meltdown and today’s excessive imbalances. Without resolution, such crises may recur. The relational nature of these imbalances necessitates international coordination, with the G20 positioned to lead efforts in transforming available funds into productive investment and improving its methodologies to mitigate excessive imbalances.