News / USA

G20 Vows To Ease Tensions over Currencies

Multimedia

Finance ministers from the G20 nations ended two days of meetings in South Korea with a pledge to ease trade tensions that threaten global recovery. Though short on details, the informal agreement on exchange rates is seen as a step forward in defusing tensions that could lead to protectionism and possible trade wars.  But without a viable enforcement mechanism, according to noted American economist Joseph Stiglitz, the pledges are nothing more than symbolic.

Under pressure to show leadership and boost cooperation on rebalancing the world economy, finance leaders meeting in South Korea vowed not to use their currencies as economic weapons to boost exports.


But without agreement on how to measure progress, South Korea's finance minister said cooperation is crucial. "In terms of exchange rates, we decided to move towards more market-determined exchange rate systems that reflect underlying economic fundamentals and refrain from competitive devaluation of currencies," said Yoon Jeung-Hyun said.

The agreement comes amid fears that some nations are devaluing their currencies to gain a competitive edge.  The U.S., for example, accuses Beijing of keeping its currency artificially weak to make Chinese goods cheaper.

But some say its not entirely China's fault.

Nobel prize winning economist Joseph Stiglitz says U.S. policies that have driven interest rates to near record lows are also contributing to volatility. "What countries all over the world are saying today is that America's policy of flooding the world with money, quantitative easing, is causing havoc everywhere.  The money rather than going into increased lending, which it's not, is looking around the world for the highest return," he said.

Which, he says, puts pressure on international exchange rates.

Stiglitz admits China's yuan, which is pegged to the value of the dollar, needs to rise faster.
But he agrees with Beijing that such steps must be gradual or many Chinese factories, dependent on exports, will close.

"The last thing the world needs now is a crisis in China.  So China is right that the first order of the day is to maintain stability.  Some adjustment would be I think good for China in that stability, but it has to be done in a controlled manner," he said.

Although the U.S.-brokered plan for market-driven exchange rates has the backing of G20 leaders, numerical targets and enforcement have yet to be agreed upon.  World leaders are expected to tackle that issue at the G20 summit next month.  

Stiglitz predicts lively debate, but little in the way of agreement. "As I look at the G20, I see such differences in perspectives that I don't think there's going to be a meeting of the minds. And unfortunately it takes a strong mediator to bring everybody together and I don't see that kind of mediation, anybody playing that role in the global economy today," he said.

The role of mediator could go to the International Monetary Fund.  

The plan envisioned by G20 finance ministers gives the IMF a greater role in overseeing exchange rates and trade imbalances. But other than applying pressure, the IMF has little or no power over countries that don't borrow from it.

You May Like

Turkey's Controversial Reform Bill Giving Investors Jitters

Homeland security reform bill will give police new powers in search, seizure, detention and arrests, while restricting the rights of suspects, their attorneys More

Audio Slideshow In Kenyan Prison, Good Grades Are Path to Freedom

Some inmates who get high marks could see their sentences commuted to non-custodial status More

'Rumble in the Jungle' Turns 40

'The Champ' knocked Foreman out to regain crown he had lost 7 years earlier when US government accused him of draft-dodging and boxing officials revoked his license 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.
Victorious Secularists Face Challenge to Form Government in Tunisiai
X
Henry Ridgwell
October 30, 2014 11:39 PM
Official results from Tunisia show the Islamist Ennahda party has failed to win the second free election since the so-called "Arab Spring" uprising in 2011. Ennahda, which handed power to a government of technocrats pending the elections, lost out to the secular party Nidaa Tounes. Henry Ridgwell reports from London that the relatively peaceful poll offers some hope in a volatile region.
Video

Video Victorious Secularists Face Challenge to Form Government in Tunisia

Official results from Tunisia show the Islamist Ennahda party has failed to win the second free election since the so-called "Arab Spring" uprising in 2011. Ennahda, which handed power to a government of technocrats pending the elections, lost out to the secular party Nidaa Tounes. Henry Ridgwell reports from London that the relatively peaceful poll offers some hope in a volatile region.
Video

Video Africa Tells its Story Through Fashion

In Africa, Fashion Week is a riot of colors, shapes, patterns and fabrics - against the backdrop of its ongoing struggle between nature and its fast-growing urban edge. How do these ideas translate into needle and thread? VOA’s Anita Powell visited this year’s Mercedes Benz Fashion Week Africa in Johannesburg to find out.
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 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.

All About America

AppleAndroid