The finance leaders sought to project an air of cooperation even though they were unable to resolve sharp differences that have risen to the surface following an initially botched bailout of Cyprus in March. The banking troubles in the small Mediterranean island country renewed fears that a prolonged European debt crisis still poses significant risks to the global economy.
The United States was represented at the finance meetings by Treasury Secretary Jacob Lew and Federal Reserve Chairman Ben Bernanke. The administration pushed for European nations to moderate their austerity programs of spending cuts and tax increases in favor of more stimulus to bolster growth and combat painfully high unemployment in countries such as Spain and Greece.
"'Strengthening global demand is imperative and must be at the top of our agenda," Lew said in his remarks to the IMF. "Stronger demand in Europe is critical to growth."
But this push was met with resistance from countries such as Germany and Britain, which believe that heavily indebted European nations must reduce their deficits to give markets confidence and keep government borrowing costs low.In the end, the finance leaders sought to bridge the differences by issuing economic blueprints that left room for both the growth and austerity camps to claim victory. Dutch Finance Minister Jeroen Dijsselbloem, the head of the Eurogroup, encompassing the 17 finance ministers whose countries use the euro currency, told reporters Saturday said that European nations needed to keep pushing to reduce huge budget deficits but "we can and will adjust" the speed that the deficit cuts are implemented to take into account economic conditions. The G20 nations did reject proposals to issue hard targets for reducing budget deficits, a victory for the United States and Japan, who had argued for more flexibility. The G20 joint statement singled out the recent aggressive credit-easing moves pushed by Japanese Prime Minister Shinzo Abe, saying they were intended to stop prolonged deflation and support domestic demand.