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

Video China Investigates Powerful Former Security Chief

Analysts say move by President Xi is an effort to win more party support, take step toward economic reforms, removing those who would stand in way of change More

South Africa Land Reforms Still Contentious 20 Years Later

Activists argue that the pace of land reform is slow and biased; legal experts question how some proposed reforms would be implemented More

In Vietnam, Religious Freedoms Violated, UN Finds

Beliefs reportedly prompt heavy surveillance, intimidation and travel restrictions 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.
Information War Rages Alongside Real One in Ukrainei
X
Al Pessin
July 31, 2014 8:13 PM
The downing of the Malaysian airliner two weeks ago, and allegations that Russians are shelling Ukrainian troops across the border, have moved the information war swirling around the Ukrainian conflict to a new level. VOA's Al Pessin reports from Kyiv.
Video

Video Information War Rages Alongside Real One in Ukraine

The downing of the Malaysian airliner two weeks ago, and allegations that Russians are shelling Ukrainian troops across the border, have moved the information war swirling around the Ukrainian conflict to a new level. VOA's Al Pessin reports from Kyiv.
Video

Video When Fighting Eases, Gazans Line Up at Bakeries

When there is a lull in the conflict in Gaza, residents who have been hunkered down in their apartments rush out to stock up on food and other necessities. Probably the most important destination is the local bakery. VOA’s Scott Bobb reports from Gaza City.
Video

Video US-Funded Program Offers Honduran Children Alternative to Illegal Immigration

President Obama and Central American leaders recently agreed to come up with a plan to address poverty and crime in the region that is fueling the surge of young migrants trying to illegally enter the United States. VOA’s Brian Padden looks at one such program in Honduras - funded in part by the United States - which gives street kids not only food and safety but a chance for a better life without, crossing the border.
Video

Video 'Fab Lab' Igniting Revolution in Kenya

The University of Nairobi’s Science and Technology Park is banking on 3-D prototyping to spark a manufacturing revolution in the country. Lenny Ruvaga has more for from Nairobi's so-called “FabLab” for VOA.
Video

Video Gazans in Shelled School Sought Shelter

Israel's air and ground assault against Hamas-led fighters in Gaza has forced many Palestinians to flee their homes, seeking safety. But safe places are hard to find, as VOA’s Scott Bobb reports from Jabaliya.
Video

Video Rapid Spread of Ebola in West Africa Prompts Global Alert

Across West Africa, health officials are struggling to keep up with what the World Health Organization describes as the worst ebola outbreak on record. The virus has killed hundreds of people this year. U.S. President Barack Obama and other world leaders are watching the developments closely as they weigh what actions, if any, are needed to help contain the disease.
Video

Video Michelle Obama: Young Africans Need to Embrace Women's Rights

U.S. first lady Michelle Obama urged some of Africa's best and brightest to advocate for women's rights in their home countries. As VOA's Pam Dockins explains, Obama spoke to some 500 participants of the Young African Leaders Initiative, a six-week U.S.-based training and development program.
Video

Video Immigrant Influx on Texas Border Heats Up Political Debate

Immigrants from Central America continue to cross the U.S.-Mexico border in south Texas, seeking asylum in the United States, as officials grapple with ways to deal with the problem and provide shelter for thousands of minors among the illegal border crossers. As VOA's Greg Flakus reports from Houston, the issue is complicated by internal U.S. politics and U.S. relations with the troubled nations that immigrants are fleeing.
Video

Video Study: Latino Students Most Segregated in California

Even though legal school segregation ended in the United States 60 years ago, one study finds segregation still occurs in the U.S. based on income and race. The University of California Los Angeles Civil Rights Project finds that students in California are more segregated by race than ever before, especially Latinos. Elizabeth Lee reports for VOA from Los Angeles.

AppleAndroid