The G20 leaders agree to strengthen global financial safety nets and financial sector reform, according to the joint communique issued Friday after the Seoul Summit.

"Strengthened global financial safety nets can help countries to cope with financial volatility, reducing the economic disruption from sudden swings in capital flows and the perceived need for excessive reserve accumulation," said the communique.

The G20 countries will strengthen global financial safety nets through four measures, including the enhancement of the Flexible Credit Line (FCL), the creation of the Precautionary Credit Line ( PCL) as a new preventative tool, the improvement of global capacity to cope with shocks of a systemic nature, the dialogue to enhance collaboration between regional financing Arrangements and IMF.

As the global economy became more interconnected and integrated, the size and volatility of capital flows increased significantly. The increased volatility was a source of instability during the financial crisis. It even adversely affected countries with solid fundamentals and the effects were greater on those with more open economies.

The G20 Summit on Friday also delivered the core elements of the new financial regulatory framework to transform the global financial system. The G20 endorsed the landmark agreement reached by Basel Committee on Banking Supervision (BCBS) on the new bank capital and liquidity framework, which increases the resilience of the global banking system.

The leaders reaffirmed that no firm should be too big or too complicated to fail and that taxpayers should not bear the costs of resolution. Collectively, the G-20 economies comprise 85 percent of global gross national product and 80 percent of world trade, including EU intra-trade.

Attending the two-day Seoul Summit were leaders from the G20 member countries, the European Union, the IMF, the World Bank, the UN, the World Trade Organization, the OECD, the African Union, and the International Labor Organization, as well as from five non-G20 countries -- Ethiopia, Malawi, Singapore, Spain, Vietnam.

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