G10 Definition: The G10 Countries and Monetary Agreements

The G10 is a collection of industrialized nations whose economic interests overlap. These nations agree to contribute to the International Monetary Fund (IMF), a deal known as the General Arrangements to Borrow (GAB).

Member countries of the G10 include Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, the United Kingdom, and the United States. As a borrowing arrangement, the G10 countries meet at the Bank for International Settlements (BIS) to oversee financial matters and loan agreements.

In 1962, eight of the world’s wealthiest nations agreed to provide monetary support to the International Monetary Fund, creating the General Arrangements to Borrow in the process. The eight countries were Belgium, Canada, France, Italy, Japan, the Netherlands, the United Kingdom, and the United States. The central banks of Germany and Sweden also agreed to contribute to the IMF.

Saudia Arabia also participated in the GAB until the program ended in 2018. Until then, the GAB facilitated lending between G10 countries when the IMF did not have sufficient funds; however, this form of money exchange took place only when members of the New Arrangements to Borrow (NAB)—another credit arrangement—rejected a NAB proposal. More than three dozen countries participate in the NAB.

The G10 intended for their monetary resources to mainly support other members of the IMF, but in some cases, funds have extended to nonparticipants. International organizations—including the European Commission, Organisation for Economic Co-operation and Development, IMF, and BIS (Bank for International Settlements)—oversee the actions of the G10.

Since its founding in 1962, the G10’s activities have led to positive outcomes around the world. A few benefits of the G10 include:

• Global trade assistance: G10 financial ministers meet with the World Bank and the International Monetary Fund (IMF) to develop monetary policy that supports the general health of the global economy. The decisions these representatives establish facilitate trade agreements between countries, which have an international impact.
• Increased lending power: In cases in which the IMF cannot provide sufficient funds to a G10 country, members can generate loans through the New Arrangements to Borrow (NAB). This exchange of currencies increases lending opportunities that support the development of the global economy.
  
• Resolution of financial problems: As a collective group, G10 members can rely on one another in times of economic stress. Central bank governors of the G10 regularly meet to discuss financial challenges, so they can collaborate to resolve financial crises.

The G10 has received criticism in response to its limited focus on assisting developing countries. Since member countries include a set of highly developed nations, finance ministers direct funds mainly toward the interests of member countries and other developed nations.

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