European countries have taken tough measures in easing the effects of this global financial crisis.

At the upcoming summit of G20 countries, top finance officials from the biggest economies all over the world will discuss the next steps they would take towards the full recovery of the global economy.

European countries, in the meantime, have pushed for the G20 countries to take a crackdown on the bonuses and incentives given to bankers to avoid irrational risk-taking on the part of bank executives. The U.S. has stressed the importance of boosting bank reserves to prevent a similar recession from recurring.

Though many G20 countries have experienced a slightly higher growth rate in the second quarter of 2009, many of them are still skeptical that the recession has truly died out. European countries have taken a closer look at the role played by the excessive amounts of bonuses and incentives given to bank executives in the global recession.

In April 2009, during the last G20 meeting, leaders from these developed countries promised to impose tougher new principles with regards to pay and compensation, though little progress has been made over-all.

French Finance Minister Christine Lagarde further noted that individual compensation is generally the key to determining the behavior and risk adopted by a trading room. France’s largest bank, BNP Paribas, has taken measures to reduce these incentives by cutting to half the bonuses given this year and along with other banks, has taken steps in evaluating and giving incentives based on performance. But this European push has been received rather coldly by other G20 countries.

U.S. Treasury Secretary Timothy Geithner has not issued a statement with regards to the European’s plans but has rather pushed for increasing and boosting bank’s capital and reserves. Geithner wanted the G20 to discuss among themselves measures towards improving bank capitals that would establish “a more conservative framework of constraints on leverage in the financial sector across the major globally active financial institutions.”

This plan by the Obama administration aims to establish stronger standards for the reserves banks are allowed to hold to cover for potential loan losses. The U.S. aims to reach an agreement with other countries by 2010’s end and hopes to implement the plan by 2012.