An agreement by the G20 is important. But politics might yet stand in the way of economic reform.
Economics at G20 must come before politics
There will no doubt be plenty of politics on the agenda at this week's meeting of the G20. The escalating crisis in Syria, the situation in Egypt, what happens in the row between Russia and the United States over the whistle-blower Edward Snowden: all of these will be discussed in the coming days.
But the main topic will be the global economy. The G20 was formed during the biggest financial crisis of the modern era, creating a forum for large economies to talk to each other. The 20 nations that make up the summit together account for over 80 per cent of total global economic output and the financial crisis hit them hard.
Half a decade on, the United Kingdom and the US appear to be returning to modest growth. The European Union has avoided, for now, the need to further bail-out the economies of its members. China continues to grow, but its banks were not as exposed to the crisis as western banks were.
Banking reform remains at the top of the G20's thoughts this week. The 2008 financial crisis began when Lehman Brothers collapsed. The impact on the global markets of such a collapse spooked politicians, to the point where they concluded that other banks of equivalent or greater size than Lehman could not be allowed to collapse. They had become "too big to fail", with leaders reasoning that allowing them to go under risked taking the entire global system with it. The result was the shoring up and even part nationalisation of banks in Europe and North America.
Since then, the G20 has sought to find ways to reduce the chance that such a crisis could occur again. The difficulty with banking regulation is that banks operate across national borders, so regulation needs to be coordinated, or banks will simply operate from the most favourable banking environments.
The banking system needs transparency and trust. So far, the G20 has agreed that big, international banks should hold more capital than purely national banks, so that they will not become over-leveraged. But there needs to be clarity over how banks that are headquartered in one country but operate in others - like so many international banks in the UAE - will deal with another crisis.
It will not be easy to find agreement on such regulation, but it is vital. Five years on, the effects of the crisis still cause real harm to real people, affecting economic growth, wages and house prices. An agreement by the G20 is important. But politics might yet stand in the way of economic reform.