THE CHAIRMAN

3 July 2017

To G20 Leaders

A decade after the start of the global financial crisis, G20 reforms are building a safer, simpler and fairer financial system.

The largest banks are considerably stronger, more liquid and more focused. They are now subject to greater market discipline as a consequence of globally-agreed standards to end too- big-to-fail. A series of measures are eliminating toxic forms of shadow banking and transforming the remaining into resilient market-based finance. Reforms to over-the-counter (OTC) derivative markets are replacing a complex and dangerous web of exposures with a more transparent and robust system that better serves the real economy. And authorities are now both more vigilant to emerging vulnerabilities and more consistent in preventing regulatory arbitrage.

The real economy is beginning to realise the benefits of your sustained efforts. Credit is now growing in all major economies while the cost of financing has remained low. Sources of finance are increasingly diversified between banks and markets. And the system is demonstrating an ability to dampen shocks rather than amplify them.

G20 countries now have a strategic opportunity to build on this foundation to create an open, global financial system. Doing so would further support the cross-border investment needed for strong, sustainable and balanced growth across the G20.

This letter reports on the progress made and highlights the main issues which require the attention of the G20 Leaders by answering three questions.

What’s Been Achieved?

G20 reforms have now addressed the fault lines that caused the global financial crisis.