G20 pledge to avoid currency war gets lukewarm reception

by
November 12, 2010

Phillip Inman and Patrick Wintour in Seoul, guardian.co.uk

The G20 summit concluded this morning after failing to tackle growing concerns that currency wars between Washington and Beijing will undermine hard-won stability in the global economy.

A statement declaring that the group of developed and emerging nationswill monitor developments for signs of countries artificially deflating theircurrencies gained a lukewarm welcome from critics who said the G20 had papered over the cracks of a problem that could jeopardise recovery from the financial crisis.

The summit set vague “indicative guidelines” to measure imbalances between their multi-speed economies but – calling a timeout to let tempers cool – left the details to be discussed in the first half of next year.

In the final statement of the summit, the group’s fifth since the financial crisis plunged the world into recession in 2008, the leaders vowed to move towards market-determined exchange rates and shun competitive devaluations.

The prime minister, David Cameron, said it was significant the G20 had recognised that global imbalances posed a problem and was alive to concerns of a race to the bottom.

He praised the G20 for putting in place a mechanism that will allow the International Monetary Fund to assess countries and the effects of their exchange rate policies.

Downplaying concerns the issue had been “kicked into the long grass” he said it was significant there was a timetable for addressing concerns at the next G20 summit in France.

He also hailed a point made in the communique that there was a critical, but narrow, window of opportunity to conclude the long-elusive Doha round of trade liberalisation talks launched in 2001.

Britain stood on the sidelines for much of the conference as verbal jousting between the United States and China dominated proceedings.

To read more, visit: http://www.guardian.co.uk/business/2010/nov/12/g20-leaders-pledge-to-avoid-currency-war

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