G-20 officials to discuss recovery and 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. They will also discuss further financial reforms such as a U.S. proposal for an international accord on increasing banks' capital reserves.

Agreement is less likely, however, 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 G-20 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.

Geithner wants to start talks on a new international capital accord that he says would put in place "a more conservative framework of constraints on leverage in the financial sector across the major globally active financial institutions." The accord would be developed under the auspices of the Financial Stability Board, an international body that was recently expanded to include major emerging economies such as China, India and Brazil.

The Obama administration released a proposal Thursday that would establish stronger international standards for the capital that reserves banks are required to hold to cover potential loan losses. Many experts believe last year's financial crisis occurred at least partly because current bank regulations don't impose strict enough requirements for the reserves a bank has to cover its loan losses.

The administration released a 14-page outline of the proposed capital standards, requiring higher cash cushions for firms deemed to pose a threat to the overall stability of the financial system.

Under Geithner's proposal, a comprehensive international agreement should be reached by the end of 2010, with countries agreeing to implement the plan by the end of 2012.