The FM said that however, there are inherent challenges facing the G20 going forward. Firstly, he said that the agenda setting of G20 has had an advanced country perspective so far. This is highlighted by the emphasis given on financial regulation and on transparency whether it be in taxation or in the Extractive Industry Transparency Initiative (EITI). As the crisis originated in the advanced countries, it is natural that higher capital requirements and asset quality have been stressed in the Basel norms for banking sector. Emerging markets have accepted these norms in a spirit of multilateralism. However in the context of a weak global recovery, the procyclical bias should not be a stumbling block in developing countries. Since growth in emerging markets is crucial to the strength of the global economy, it is critical that G20 finds ways to develop strong links of coordination and cooperation and take up issues of importance to emerging economies as otherwise, G20 may evolve as a loose forum instead of a powerful steering wheel of global governance, he added.

Mr Chidambaram pointed out that the reforms of international financial institutions of global governance have been among the top priorities of G20. Indeed the G20 has initiated a considerable governance reforms in the pillars of global governance namely IMF, World Bank, and Financial Stability Board (FSB), as well as in many of the Standard Setting bodies (SSBs). However, progress thus far has been extremely limited and far from satisfactory, and some members have not been able to adhere to the commitment on certain reforms by Leaders. Most advanced countries have now clearly indicated their unwillingness to move ahead on IFI governance and capital reforms. This has hampered credibility of the G20, and makes it difficult to, progress on other issues as well, he added.