At the G20 meeting of financial leaders in Busan, South Korea, on June 4-5, debate was intense over the timing and procedure of ending stimulus measures. Chen Fengying, Director of the Institute of World Economic Studies of the China Institute of Contemporary International Relations, said participants discussed cautious exit strategies, but did not reach a consensus on levying banking taxes. Chen shared her ideas on the meeting and the upcoming G20 summit in the China Securities Journal. Edited excerpts follow:

The G20 meeting of finance ministers and central bank governors has in effect become a prelude for the next G20 summit. Topics ranged from creating and maintaining a robust, sustainable and balanced growth framework to financial institute reform and scrutiny.

At this point, and after numerous measures have been taken to alleviate the current crisis, a second round of recession is unlikely, but not inconceivable. The international organizations are optimistic about the prospects of the world economy. Meanwhile, the recent recovery has been driven by emerging markets instead of those in developed countries. As long as emerging economies like China and India do not encounter major financial troubles, and the track of sound economic development does not reverse itself, the world will experience a new wave of economic progress.

At present, European countries are not the only ones to find themselves with debt troubles. All Western countries, heavily relying on borrowed money, are burdened with debt problems. They are major debtors, while the Oriental countries are major creditors. The more debt Western countries bear, the more risks developing countries face.

Since the outbreak of the European debt crisis in April, the exit policies, which were expected to take place in the second half of this year, were postponed. Now, nations are more cautious and prudent in arranging timetables for their financial policies.

In terms of financial scrutiny and reform, the International Monetary Fund (IMF) proposed to levy a financial activities tax and financial stability contribution on financial institutions, including banks, insurers and hedge funds, in April, but has since reached an agreement with major economies. At the G20 summit in late June the IMF will come out with a final report explaining the proposals' feasibility, items of taxation and tax rate.

Currently, there is little debate on the financial stability contribution. For instance, European countries have agreed to start levying the tax, but the rest of the international community is turning its back on it.

The activities tax is meant to curb short-term cross border capital flow, also called hot money. The speculative money can easily cause capital asset bubbles in countries, while a reversal will lead to sharp price fluctuations in the market, causing high risks to a country's financial stability. A tax on short-term capital to guard against short-term financial damages is also a possibility.

In spite of the current economic achievements, it is still not right to say the medium- and long-term economic development is ensured. If countries adopt hostile measures toward each other, a second recession would be inevitable. But if they take concerted measures to cope with the crisis, it is possible that the June G20 meeting will produce encouraging resolutions.