AUSTERITY CHALLENGE: Protesters gather in central Athens on October 13 to voice opposition to the Greek Government's economic austerity measures (XINHUA)

G20 financial leaders endorsed a capital surcharge ranging from 1 percent to 2.5 percent on banking giants, including Goldman Sachs, HSBC, Deutsche Bank and JP Morgan. Ren believes increasing capital adequacy will help decrease systemic risks in the financial system, but it is unclear if these banks can increase capital adequacy by themselves.

He pointed out many banks were dragged down by the European debt crisis and their profits have dropped sharply. Plus, the crisis is still spreading.

The meeting called on all countries to undertake further structural reforms to raise potential growth through encouraging growth, job creation and promoting social inclusion. It also made an action plan that contains measures to address immediate vulnerabilities and strengthen the foundations for strong, sustainable and balanced growth.

It required advanced economies to adopt policies to build confidence and support growth, and implement clear, credible and specific measures to achieve fiscal consolidation. In the meantime, emerging market economies should adjust macroeconomic policies to maintain growth momentum, contain inflationary pressures and endeavor to enhance resilience in the face of volatile capital flows.

"The meeting made a breakthrough on strengthening supervision to foster financial market stability," said Ren. "It is worth mentioning that while supporting emerging economies' efforts to promote exchange rate flexibility, the meeting reiterated disorderly exchange rate fluctuations will damage economic and financial stability."

IMF governance

At the Paris meeting, G20 financial leaders agreed to improve the IMF's governance. But they didn't reach an agreement on capital injection into the IMF.

The communiqué stated the IMF must have adequate resources to fulfill its systemic responsibilities, calling for the full implementation of the 2010 quota and governance reform.

In September, IMF chief Christine Lagarde said the IMF's current capital adequacy would not fulfill all loan demands if the global economic situation keeps deteriorating. But G20 countries have different ideas on putting more capital into the IMF. U.S. Treasury Secretary Timothy Geithner said during the meeting that he had faith in the IMF's financing capability. The United States promised to support European bailout strategies based on existing resources. Germany and Japan held similar stances.

Ren pointed out that there are at least two reasons for developed economies to reject capital injection. First of all, most developed countries now have economic troubles, and some of them have to deal with political pressures at home. It will be hard for them to take extra money out of their pockets.

For example, recent statistics show the U.S. fiscal deficit amounted to $1.3 trillion in the 2011 fiscal year that ended on September 30. The country's total national debt has reached $14.8 trillion. The two major political parties of the United States have quite different opinions on how to reduce the deficit, and they continue to wrestle over the subject in the U.S. Congress.

Moreover, developed countries are worried that capital injection into the IMF might lead to emerging economies' growing weight in the organization, Ren added.

"Though Washington is willing to help Europe out of the current debt crisis, its domestic political and economic situations don't allow it to put more money into the IMF," said Wei.

According to the communiqué, G20 financial leaders will submit proposals to the Cannes Summit on issues including the IMF reform.

"The upcoming summit will focus on the European debt crisis, while continuing discussions on issues related to the world economy's robust, sustainable and balanced development," Wei said.