Political Risk Latin America Blog @PolRiskLatam

G20 agrees on “indicative guidelines” for imbalances and hopes for the best

Posted in News and Articles, Political Risk by politicalrisklatam on November 12, 2010

by Merco Press News, November 12th, 2010.

Leaders of the Group of 20 (G20) member nations meeting in Korea reached a vague compromise Friday on currency and trade issues, calling for a workable resolution for the next G20 summit in France, slated for November next year.

In the Seoul Declaration released following the two-day G20 Seoul Summit, the participating heads of state agreed that “indicative guidelines” on current account balances will be initiated and undertaken in due course.

The declaration calls for an action plan under which they will call on their framework working group, with technical support from the IMF, to develop numerical guidelines, with the progress to be discussed by finance ministers in the first half of 2011, according to the communiqué. Although the agreement is seen as progress as they set imbalance guidelines, many still doubt the feasibility of the communiqué as it is too vague and unbinding with no numerical targets.

The U.S., supported by Korea, has called for a numerical limit ― but this move has met a strong backlash from countries such as China, Japan and Germany. U.S. Treasury Secretary Timothy Geithner had urged each country in the G20 to adopt numerical targets to limit excesses in trade surpluses or deficits. (continue reading… )

 

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