G20 officials to talk recovery, bank reserves

LONDON — Top finance officials at a Group of 20 meeting in London are expected to stress their commitment to boosting the global economy for now — despite friction over when exactly to scale back stimulus efforts amid growing signs of recovery.

Finance ministers and central bankers will try to coordinate plans for an eventual winding down of the trillions of dollars of support, as well as discuss further financial reforms such as a U.S. proposal for an international accord on increasing banks' capital reserves.

Agreement is less likely on a European proposal to curb bankers' bonuses, which may run into a U.S. stumbling block.

Treasury Secretary Timothy Geithner played down expectations for major announcements from the gathering on Friday and Saturday, saying it was a step toward a meeting of G20 national leaders in Pittsburgh later in the month.

"This is a stock-taking meeting, not a new-initiatives meeting," Geithner told reporters at a briefing in Washington D.C.

The finance ministers and central bank officials from rich and developing countries representing 80 percent of world economic output are convening amid gathering indicators of an economic recovery. Japan, Germany, France and Australia all recorded growth in the second quarter while Britain is widely expected to do so in the third quarter.

But fears remain that curtailing government spending and monetary stimulus via low interest rates and money supply boosts too soon could result in a "double dip" recession.

"You're seeing the first signs of positive growth now in this country and countries around the world," said Geithner. "We've come a very long way but I think we have to be realistic, we've got a long way to go still."

British Prime Minister Gordon Brown, French President Nicolas Sarkozy and German Chancellor Angela Merkel issued a joint letter on Thursday urging the G20 to stick to stimulus plans, while avoiding future imbalances in the global economy such as excessive budget deficits.

But the London meeting will also discuss a framework for how the world's biggest economies can start to withdraw packages such as Britain's multibillion asset purchasing program to expand the money supply and the U.S. capital injection into struggling companies such as General Motors.

"The agenda has shifted from 'will we recover?' to 'how are we recovering' and, even, 'do we need to start removing stimuli?' said CentreForum economist Giles Wilkes.