Introduction

The realisation that emerging economies were becoming systematically important dawned on the major advanced economies with the Asian and Russian financial crises of the late 1990s, and hence, the necessity was felt for a larger forum than the G7 encompassing the emerging economies. The Group of Twenty Countries (G20) was launched as a forum of the finance ministers and Central Bank governors primarily to address the challenges to international financial stability that had begun in Asia in 1997. The need was felt for a “permanent forum” for informal dialogue between developing and developed countries in the G20. The need for the inclusion of major emerging economies in discussions on the international financial system was underlined by the global financial crisis of 2008. A platform was created where leaders of systemically important countries resolved to coordinate macroeconomic policies to counteract the global financial crisis. In turn, they analysed the deeper, underlying causes of the financial crisis. This chapter introduces and motivates the book and discusses the rationale behind the formation of the G20. It discusses the background of the G20, the role of G7 and G8, and discusses the organisation of the book in the chapters that follow.