Eleven countries share common economic goals as members of the G10. An annual meeting of the member countries is held to discuss and debate global financial issues.
When the International Monetary Fund’s (IMF) resources fall short of the demands of one of its member countries, the GAB (General Arrangements to Borrow) is triggered. The nations that make up the Union are:
- The United Kingdom
As a result of a 1962 agreement between the governments of eight IMF members and two central banks (Sweden and Germany), the G10 was created.
In 1964, Switzerland became a member of the G10, bringing the total number of members to 11. Name G10 did not change.
Immediately after its founding, the G10 expanded its cooperation with the IMF by releasing studies that contributed to the formation of the Special Drawing Right. A few examples of G10-sponsored publications are as follows:
- Aging and adjustments to the pension system were discussed in 2005.
- Impact of micro policies on the market for financial assets (2003)
- Arrangements for insolvency (2002)
- A financial sector consolidation study (2001)
- Introduce electronic money, formulate consumer protection policies, enforce laws, and deal with cross-border issues (1997)
- The G10 is also responsible for the creation of the Smithsonian Agreement, which replaced the fixed exchange rate with a floating exchange rate when the Bretton Woods System failed.
The G10’s roles and responsibilities
Coordinating monetary and fiscal policies to promote global economic stability is one of the key goals of the G10.
Every year, central bank governors and finance ministers from member nations convene to debate financial and monetary policies that influence them, their trade, and the global economy. The GAB agreement may also be activated at their discretion.
When NAB members decline to activate the NAB agreement, the IMF authorizes member nations to employ this option. With the NAB, the IMF and its 38 member nations can borrow more funds.
Also See: Freely Associated States 2022
The BIS (Bank of International Settlements) is an international financial institution owned and controlled by 60 member central banks that host the G10 governors every two months.
As the central bank for member central banks, its major goal is to maintain financial stability and develop collaboration.
Many opponents say that, despite the G10’s commitment to creating policies that help maintain global financial stability, they fail to meet the requirements of developing nations.