What can we hope for from this Summit?
Each country taking part has its own agenda and priorities.
The UK, with its economy very dependent on its Financial Services sector, needs to see foreign cash flowing back into "The City" and is looking to other countries embarking on money creation policies.
The USA above all else needs a narrowing of its trade balance deficit, this largely relies on the Dollar devaluing against primarily the Yuang but generally against all currencies.
The smaller developing countries, and here I look at a bloc including Brazil, Chile, South Africa and Argentina. Have run their economies on a fairly conservative basis over the last decade and require general increase in the demand for raw materials and minerals.
China, India, South Korea and Indonesia make another interesting group with their primary interest keeping the market niche's they have developed.
Canada and Mexico need assurance that USA does not close its borders to imports.
Saudi-Arabia and Russia need an oil price exceeding $65 as do most of the oil producers.
Germany and France having accepted the pain of keeping their economies in reign during the last 10 years, bringing their annual deficits into line with Euro Zone rules, see a need mainly for the UK and USA to bring their economies under better regulation, note I am not talking about their Banking sectors but about them regulating the money creation within their economies.
Russia and China have signalled that they would like the World to move away from the Dollar as the primary reserve currency.
With all these divergent requirements it is difficult to see anything other than a fudge.
Just as much as we would like to see a substantial revaluation of the Yuang, China has a right to say that until the average standard of living of the Chinese population is comparable with those of the Western economies they will continue with their policy of 3% annual revaluation projecting Dollar parity somewhere around 2040.
At best we will see a general agreement for all countries to do everything within their means to apply fiscal stimulus to their own economies, hopefully aimed mainly at infrastructural development rather than attempting refuelling the fires of speculation. We will also see a general agreement to tighten Banking regulation, without any specifics.
What the world needs is however something that gives the people a reason to be confident in currencies and through that the future.
The simplest way is for all countries to pledge to strengthen their own Central Bank reserves. Something along the lines of my earlier blog where I proposed that 5% of all exports or international money flows be deposited with the BIS (or for that matter the IMF) The countries in turn would "print money" for their local economies, a little like the days when there was exchange control and the Central Bank received the foreign currency and credited the recipients Bank with local currency.
This would create a World Central Bank that over a short period of time (20/25 years) would have reserves approaching the level of annual money flows around the world. This Central Bank would then be in a position to fund the short term crises that may arise from time to time. It would also be able to fund infra structural projects in the third world.
Possibly the 5% that I say is too high, however individual countries would be free to sterilise this money creation, should it provide an inflationary environment in that country, as indeed they would still be free to deficit finance their budgets should there be a need within the economy.
Better regulation of Financial Sectors is also important … but possibly more important is that countries subscribe to a discipline of prudence in the running of their own economies. I don't mean Gordon Browns prudence of keeping borrowing off balance sheet, and instruction to the FSA to regulate Banks with a "light touch".
While this would ultimately mean a basket of currencies would replace the dollar as the primary reserve asset, this would be a gradual change giving the US economy and others a fair time in which to get their houses in order.