News / Asia

Finance Ministers, Bank Governors Meet to Avert Currency War

South Korean police officers patrol at the Gimpo Airport in Seoul, South Korea.  South Korean police will go on high alert and mobilize a record 50,000 officers to thwart possible threats from North Korea. international terrorists and anti-globalization d
South Korean police officers patrol at the Gimpo Airport in Seoul, South Korea. South Korean police will go on high alert and mobilize a record 50,000 officers to thwart possible threats from North Korea. international terrorists and anti-globalization d

Finance ministers and central bank governors from the 20 largest economies are gathering in South Korea as concerns grow about the possibility of a currency war.

Starting Friday, the economic policy makers of the top 20 economies will spend two days trying to reach agreements on the global financial system.

High stakes

Economics Professor Joshua Aizenman at the University of California-Santa Cruz says the meeting comes at a critical juncture.

"The stakes are too high to ignore the downside risk of a resumption of either more aggressive currency wars or maybe some steps that may lead then to retaliation and the beginning of trade wars," Aizenman said.

The world's three-largest economies - the United States, China and Japan - are entwined in terms of trade and investment.  But economists say the relationship is out of balance.  In part, the reason is that China's currency is significantly undervalued.  That gives Chinese exporters, their competitors say, an unfair advantage.

To protect their own export industries, Brazil, Japan and Thailand have taken steps to slow the appreciation of their currencies.  A number of other countries, including India and South Korea, are considering similar moves.

Is China to blame?

A U.S. Treasury Department senior official, without naming China, contends a large economy keeping its currency from rising "compels other countries to do the same" sparking what he terms "competitive non-appreciation."

China says America's economic problems are caused by Washington's policies and not the Chinese currency.

Professor Aizenman, the vice president of the Asia-Pacific Economic Association, says that in a globalized economy there is no way each of the G20 participants can push its own agenda without cooperation.

"So the key will be to find the proper compromise of each party without sacrificing the main agenda of each party," he noted, "but recognizing that trying to push a narrow agenda too aggressively will penalize everybody."

Compromise essential

Research fellow Kwak Soojong at the Samsung Economic Research Institute in Seoul says both Washington and Beijing appear ready for compromise.  He notes China's surprise interest rate hike this week as one sign of flexibility.

"Therefore I believe there is no reason that these two big countries do not agree upon the serious matters that the rest of the 18 member countries are looking upon," Kwak said. "I am kind of a positive man and I wish those two big countries will agree upon the currency issues."

The meetings here are a prelude to the G20 leaders' summit in Seoul next month.


Steve Herman

A veteran journalist, Steven L Herman is the Voice of America Asia correspondent.

You May Like

Ebola Death Toll Nears 5,000 as Virus Advances

West Africa bears heaviest burden; Mali toddler’s death raises new fears More

Jordan’s Battle With Islamic State Militants Carries Domestic Risks

Despite Western concerns that IS militants are preparing a Jordanian offensive, analysts call the kingdom's solid intel a strong deterrent More

Asian-Americans Assume Office in Record Numbers

Steadily deepening engagement in local politics pays off for politicians like Chinese-American Judy Chu More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Talks to Resume on Winter Gas for Ukrainei
X
Al Pessin
October 25, 2014 4:21 PM
Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Talks to Resume on Winter Gas for Ukraine

Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Smugglers Offer Cheap Passage From Turkey to Syria

Smugglers in Turkey offer a relatively cheap passage across the border into Syria. Ankara has stepped up efforts to stem the flow of foreign fighters who want to join Islamic State militants fighting for control of the Syrian border city of Kobani. But porous borders and border guards who can be bribed make illegal border crossings quite easy. Zlatica Hoke has more.
Video

Video Comanche Chief Quanah Parker’s Century-Old House Falling Apart

One of the most fascinating people in U.S. history was Quanah Parker, the last chief of the American Indian tribe, the Comanche. He was the son of a Comanche warrior and a white woman who had been captured by the Indians. Parker was a fierce warrior until 1875 when he led his people to Fort Sill, Oklahoma, and took on a new, peaceful life. As VOA’s Greg Flakus reports from Cache, Oklahoma, Quanah’s image remains strong among his people, but part of his heritage is in danger of disappearing.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.
Video

Video US ‘Death Cafes’ Put Focus on the Finale

In contemporary America, death usually is a topic to be avoided. But the growing “death café” movement encourages people to discuss their fears and desires about their final moments. VOA’s Jerome Socolovsky reports.
Video

Video Ebola Orphanage Opens in Sierra Leone

Sierra Leone's first Ebola orphanage has opened in the Kailahun district. Hundreds of children orphaned since the beginning of the Ebola outbreak face stigma and rejection with nobody to care for them. Adam Bailes reports for VOA about a new interim care center that's aimed at helping the growing number of children affected by Ebola.

All About America

AppleAndroid