The five countries charged with driving the Group of 20's efforts to tighten financial rules that proved insufficient to avoid the worst crisis since the Second World War say they're worried "complacency" may be taking hold.
Leaders from the 20 largest advanced and developing economies - a body that has supplanted the Group of Seven richest countries as the main forum for running the global economy - meet in Toronto in June for their fourth summit, and there are fresh warnings from the International Monetary Fund and other key organizations that more must be done to put meat on the bones of reform proposals approved by the G20 last September in Pittsburgh.
The proposals require banks to keep more reserves, shed more light on various corners of the financial system, curb big bonuses that encourage excessive risk-taking by executives of financial institutions, and force the financial industry to share in the cost of future bailouts.
"Collectively we have been making steady progress toward stabilizing and strengthening the global financial system by fortifying prudential oversight, improving risk management, promoting transparency, and reinforcing international co-operation," the G20 steering committee, which includes Canada, said in a letter signed by Prime Minister Stephen Harper, U.S. President Barack Obama, French President Nicolas Sarkozy, South Korean President Lee Myung-bak and British Prime Minister Gordon Brown.
However, the leaders said, "more work is required to restore the soundness of some global banks' balance sheets, to avoid leaving the global financial system vulnerable and restricting its ability to provide the credit needed to fuel sustainable economic growth."
Both the IMF and the Switzerland-based Financial Stability Board are making similar appeals to leaders to put their money where their mouths were last fall.
The IMF's managing director, Dominique Strauss-Kahn, lamented in a speech to Romania's parliament this week that the lesson from the financial crisis - the need to find global solutions to global economic and financial problems - "is about to be lost." And the FSB, which the G-20 nations have asked to help implement the promised rule changes, said many nations are lagging behind even though progress has been made in major financial centres such as the United States, Britain, Germany, France, Japan and Hong Kong.
Invoking the "mutual responsibility" of G-20 nations to "deliver on all our commitments to address the weaknesses that led to the financial crisis," Mr. Harper and his four counterparts stressed the importance of maintaining "vigilance" and "guard against complacency" as economies around the world recover.
A veteran Canadian policy maker made the same point last week, cautioning against taking financial regulation for granted and saying there's a limited window to overhaul the system.
Bank of Canada deputy governor David Longworth, who retires today, said it helps that the G20 nations have set deadlines of this year and next year to achieve broad regulatory changes. But as memories of the financial crisis fade and the world economy improves, he said, there's a risk that bank lobbyists and other special interests could derail the process.
"There is a danger people lose interest," Mr. Longworth said. "If things don't get done this year or next year, the probability they will get done internationally is lower."
The Obama administration is planning a levy on its biggest banks, and similar proposals are being discussed in Britain, France and Germany.
With reports from Kevin Carmichael in Ottawa, Bloomberg News and ReutersReport Typo/Error