the real g2: americans, europeans, and their role in the g20

AbstractGlobal economic governance is in the process ofmaking a quantum leap. Hopes regarding the G20process as the new global nucleus of political andeconomic governance are strong. But the realityof international financial market diplomacy is aharsh one. Reaching consensus among the G20participants on financial market governance hasproved a challenging task. This article argues thatthe United States and the European Union are theproblem – and its solution.Recent disagreements over capital and liquidityrequirements, the organization of over-thecounter(OTC) derivatives markets, the treatmentof alternative investments, and the handling ofsystemically important financial institutions areonly a few examples of the low point transatlanticfinancial market diplomacy has reached. At thesame time, only the United States and the EUcan provide the impetus the G20 process needs.This requires that they first and foremost arriveat joint policy positions between themselves. Inpractice, this necessitates concrete cooperation onthe scheduling, design, and details of regulation.This would optimally include ex ante bilateralconsultations on all new policy measures as well asa close coordination of policy positions discussedin the G20. In the final analysis, however, thecredibility of Americans and Europeans will dependin the long run on their ability to achieve a moreintegrated financial market at the transatlantic level.These are very ambitious objectives, but theirbenefits would be substantial and real. The UnitedStates and the EU should intensify their policycooperation and encourage their G20 partners tostrive for more effective global coordination offinancial market policies.The Real G2: Americans, Europeans,and their Role in the G201