You are here
G20 forswears currency, trade wars but sniping starts right up again
G20 Inks Pact to Avert Trade War, Seals IMF Power Shift
By Fiona Shaikh and Langi Chiang
Reuters
Saturday, October 23, 2010
http://www.reuters.com/article/idUSTRE69K0Q720101023
GYEONGJU, South Korea -- Group of 20 finance leaders struck a deal today to refrain from competitive currency devaluations, although they failed to agree firmer language that might have shored up the U.S. dollar.
At a meeting in South Korea, the growing clout of the developing world was recognized in a surprise deal to give them a bigger voice in the International Monetary Fund, which was charged with policing global stability.
Efforts by the United States to limit current account balances to 4 percent of gross domestic product, a measure aimed squarely at China's surplus, was shot down by a range of countries.
...Dispatch continues below ...
Prophecy Resource Goes Into Production
at Ulaan Ovoo Coal Mine in Mongolia
A commission appointed by Mongolia's Ministry of Mineral Resources and Energy has conducted the final permit inspection at Prophecy Resource Corp.'s Ulaan Ovoo mine site and has instructed the company to begin coal production. Prophecy Resource (TSX.V: PCY) has begun production of its first 10,000 tonnes of coal as a trial run of supply to be taken by rail to electric power stations in Darkhan and Erdenet, Mongolia's second and third largest cities after the capital, Ulaanbaatar. The company is the second-ever Canadian mining company to get a permit to mine in Mongolia and start production there.
For the company's complete announcement, please visit:
http://www.prophecyresource.com/news_2010_oct14.php
The 20 members pledged in a communique to "refrain from competitive devaluations" of their currencies, developed economies vowed to cut their budget deficits over time, and all to take action to reduce current account imbalances.
"If the world is going to be able to grow at a strong, sustainable pace in the future ... then we need to work to achieve more balance in the pattern of global growth as we recover from the crisis," Treasury Secretary Timothy Geithner said.
U.S. proposals to rein in current account imbalances came as Beijing has amassed $2.65 trillion in official currency reserves as a consequence of its huge trade surpluses, and prompted the U.S. House of Representatives to pass a bill threatening retaliation unless China lets its currency off the leash.
Chinese officials made no public comment on the dispute, but a G20 source said Beijing was opposed to any statement that explicitly bound countries to limits on current account balances or any other form of rules on currency policy.
Strains at the meeting that saw Japan and India shoot down the U.S. proposals continued after it had finished.
Germany said there had been criticism of the U.S. policy of flooding the banking system with money that has spilled over to emerging economies such as Brazil, causing asset price bubbles.
"I tried to make clear in my contribution to the discussion that I regard that (easing) as the wrong way to go," said German Economy Minister Rainer Bruederle.
"An excessive, permanent increase in money (supply) is, in my view, an indirect manipulation of the (foreign exchange) rate."
Host South Korea, however, put a more optimistic spin on the outcome of the meetings saying the G20 had helped to remove uncertainty in global markets.
"This will put an end to the controversy over foreign exchange rates," said Finance Minister Yoon Jeung-hyun.
The IMF deal was hailed by fund Managing Director Dominique Strauss-Kahn as a "historical" moment that will see Europeans give up two seats on its 24-strong board to developing countries and transfer an extra 6 percent of overall votes to them.
"This makes for the biggest reform ever in the governance of the institution," Strauss-Kahn, who heads the 187 country body, told reporters.
That deal will make China the third most powerful member of the IMF, up from six as it overtakes traditional powerhouses Germany, France, and Britain. India moves to eighth place from 11th.
"Our complaint was that the quota share should reflect ground reality and economic strengths currently, it would have eroded the credibility of the institution. That has now been corrected," Indian Finance Minister Pranab Mukherjee said.
The G20 agreed a year ago to shift at least 5 percent of voting rights to developing countries such as India and Brazil, whose clout within the Fund has not kept pace with their emergence as major engines of global growth.
* * *
Join GATA here:
New Orleans Investment Conference
Wednesday-Saturday, October 27-30, 2010
Hilton New Orleans Riverside Hotel
http://www.neworleansconference.com/redirect.php?page=index.html&source_...
* * *
Support GATA by purchasing a colorful GATA T-shirt:
Or a colorful poster of GATA's full-page ad in The Wall Street Journal on
January 31, 2009:
http://gata.org/node/wallstreetjournal
Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon:
* * *
Help keep GATA going
GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:
To contribute to GATA, please visit:
http://www.gata.org/node/16
