LONDON The immediate crisis may be over but G20 policymakers meeting must still find a way to rebalance the global economy if the world is not to be doomed to repeat the past.
Almost a year after the entire financial system narrowly averted collapse, finance ministers and central bankers from the Group of 20 rich and developing nations will gather in London on Sept 4-5 to discuss what happens next.
Since their leaders last met in April, the worst global recession since the Great Depression seems to be ending with Q2 data in a number of countries showing growth and stock markets powering ahead on optimism the good times will soon return.
But G20 policymakers will be more guarded even though discussion of exit strategies from the huge fiscal and monetary stimulus thrown into their economies will be high on the agenda.
"It is vital that countries have an exit strategy but we are very clear that interventions need to remain in place for as long as needed," a UK government source told Reuters on Wednesday.
The world's top central bankers meeting in Jackson Hole, Wyoming last week had much the same message. They said the extraordinary stimulus from governments and central banks must not be withdrawn too soon.
While the G20 will tread a fine line between trying to convince markets it has credible plans to withdraw the stimulus in an orderly way and ensuring it does not derail the recovery, analysts warn it also has to act on settling global imbalances.
"This G20 meeting is as important as the London summit in April," said Gerard Lyons, chief economist at Standard Chartered bank in London. "The two issues that stand out are exit strategies and global imbalances."
Prime Minister Gordon Brown has made finding "future sources of growth" -- or how the world economy can survive without relying just on the overstretched U.S. consumer -- his pet subject and this will also feature high on next week's agenda.
Economists and officials say finding a credible answer to the question could set the course of the global economy for another decade.
FUTURE SOURCES OF GROWTH
While there has long been agreement on paper that countries running large current account deficits need to save more and those with huge surpluses should be spending more, that has been harder to achieve in practice.
So far there is little sign the crisis has changed the strategies being pursued by surplus countries that have their own domestic politics in mind.
"Germany's (Chancellor Angela) Merkel has made it abundantly clear that the German export machine will not be one of the casualties of the crisis," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.
"In Japan, the DPJ (opposition Democratic Party of Japan) may be swept into office on Aug 30, but it shows no vision or desire to undermine the only part of the economy that has shown any life -- exports."
But perhaps the biggest issue likely to keep imbalances in play may not get much mention at next week's meeting -- the perceived undervaluation of Asian currencies, such as China's which are linked to the dollar.
"Currencies are clearly an important part of the story," said Lyons.
But officials have indicated little on the formal agenda to push China to allow its yuan currency to rise. The United States has, in fact, been taking a softer tack on Beijing during the crisis after years of hectoring with little effect.
Economists say that if anything the latest crisis may encourage countries to build up their foreign exchange reserves to protect themselves from volatile capital flows, much as the Asian crisis did in 1997-98.
"The rebuilding and expanding of the reserve war chest may in turn be recycled and help finance the budget deficits of industrialised countries," said Chandler. "Sound familiar?"
Nor is there much concrete expected that will radically change the way financial markets operate to prevent another crisis happening despite lip-service to ending risky behaviour.
"It can't be return to the old ways of high risk behaviour by financial institutions," the UK source said.
French President Nicolas Sarkozy has announced new limits on bonus payments to traders and said he would press his G20 partners to adopt the same standards as Paris.
He has said the G20 would consider setting upper limits on bonus payments or setting a global tax but few expect anything so radical to get off the ground.
(Reporting by Sumeet Desai; editing by Stephen Nisbet)