Big events often lead to big decisions.  And so at the end of World War 2, the international community created the United Nations, the International Monetary Fund and the World Bank (the latter two at a major conference in Bretton Woods, US) to usher in a new period of co-operation after half a century of war and failed peace.  These organisations are now often criticised for being out of step with modern globalisation.  For one thing, despite some minor adjustments, their governance is still dominated by the victors of World War 2.  Although the new emerging economies have have altered the power structure of the world economy, this weight is not yet reflected in the governance of these organisations.

This weekend's G20 summit was historic in many respects -- but above all by the fact that it took place.  The international community has been inching towards a G20 for a number of years.  The G20 was created after the Asian financial crisis about ten years ago.  Its members -- Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the US and the EU -- represent about 90 per cent of the world's GDP, 80 per cent of trade and two-thirds of the global population.  But, the G20 was an affair of finance ministers -- when you are talking finance, you must have the major players around the table.  This is the first time for a summit with heads of state and government.

The G8 has also been gradually shifting towards a G20.  What in 1975 as a fireside chat, opened up to Russia in the 1990s.  In recent years, a G5 of Brazil, China, India, Mexico and South Africa has emerged, and this year met both alongside and with the G8. 

This was the buildup to last weekend's G8 summit.  The driving force behind the meeting was  France's Nicolas Sarkozy, supported by Britain's Gordon Brown.  Two world leaders who were in the doldrums, have seized on the financial crisis as an opportunity to demonstrate leadership.  For continental Europeans, it was also an opportunity to insist on another version of gloabl capitalism, one that is regulated and not a jungle of animal spirits. 

Some even had the ambition of a Bretton Woods II, where they would launch a redesign of the "international architecture" (a fancy term for the system of international organisations) -- or at the very least, a re-weighting of its governance.  For the large emerging economies, what was most important was being there.  They were equal partners with the leading Western countries.  Brazilian President Lula complained that developing countries like his were "infected with problems" not of their own making.

So, what was decided at the G20.  The leaders instructed their trade ministers to bring the WTO's Doha Development Agenda to a successful conclusion.  They also agreed to refrain from raising new barriers to trade and investment for the next 12 months.  They committed themselves to advancing the reform of the Bretton Woods institutions so that they can more adequately reflect changing economic weights in the world economy in order to increase their legitimacy and effectiveness -- emerging and developing economies, including the poorest should have greater voice and representation. 

They agreed on a comprehensiive work plan for finance ministers to implement proposals for five agreed principles for reform, namely, strengthening transparency and accountability, enhancing sound regulation, promoting integrity in financial markets, reinforcing international co-operation, and reforming international financial institutions.  BUT, they noted that regulation is first and foremost the responsibility of national regulators, although they did agree to intensified international co-operation among regulators and strengthening of international standards and their consistent implementation.  They also agreed that more needs to be done to stabilise financial markets and support economic growth.    

Most importantly, the G20 leaders agreed to meet again by 30 April 2009 (!) to review the implementation of the principles and decisions agreed.  As US President George Bush said "A meeting is not going to solve the world's problems".  The meeting begins a process on the financial crisis that "will make this less likely to happen in the future".  We can only hope that this will be the case.

Ultimately, the major lasting impact of the G20 summit and the global financial crisis may be the replacement of the G8 by the G20!  According to President Lula, "we are talking about the G20 because the G8 doesn't have any more reason to exist".