US fails to win support for currency agreement at Group of 20
The Group of 20 has reached an agreement Saturday to refrain from devaluating their currencies competitively and will also provide the developing world with greater say in the activities of the International Monetary Fund (IMF), which monitors global currency stability.
Although the G20's currency agreement will give some solace to the United States, which is engaged in a high-profile currency disagreement with China, stronger measures introduced by the US were opposed by several countries, including China.
The United States had wanted to introduce an agreement whereby members of the Group of 20 would have to limit current account balances to 4% of GDP, a proposal clearly targeted at China, which is accused of devaluating its currency to prop up its trade surplus, which is at record amounts.
As a result of trade surpluses, China now holds around US $2.65 trillion in officially declared foreign currency reserves, which is the highest in the world and roughly US $500 billion more than the entire government budget of the United States. In recognition of the emerging economic significance of major countries, there was also a reshuffle in the voting power of developing countries, China overtook Britain, France and Germany to become the third most powerful member of the IMF, while India moved up from 11th place to 8th.
IMF say in China into three major reshuffle Group of 20 (G20) finance ministers and central bank governors concluded yesterday, the General Assembly issued a joint statement, agreed to International Monetary Fund (IMF) the share of reforms, more lying to the powers emerging economies, China is expected to become even more share of the top 3 largest country. Participants also agreed to avoid competing devaluation of the currency to alleviate the "currency war" tensions. After the U.S. Treasury Secretary Timothy Geithner urged the emerging economies are once again let its currency appreciate.
2-day meeting held in Gyeongju in South Korea, shares in the IMF reform, the participants agreed that the transfer to developing countries share more than 6%, more than a year ago agreed to 5%. IMF is currently the largest share of the United States (17.67%), followed by Japan (6.56%), China ranks No. 6 (less than 4%). G20 yet to determine the specific number of shares to which countries the transfer, but the IMF sources said, after adjustment, the Chinese share, or jumped to No. 3. Yonhap news agency, China or even surpass Japan to become the No. 2 power. BRIC countries (China, India, Russia and Brazil) is expected to increase to 14.18%, a total of 42.29% in emerging markets.
Board 2 seats to the specific charge or "sacrifice"
G20 member countries also agreed to pay the money and loans IMF quota increase of 1 times the current total quota of about 3,400 billion U.S. dollars (about 2.6 trillion Hong Kong dollars), increasing the quota would "strengthen the IMF over the next few years to prevent or respond to potential crises."
IMF president Sitelaosi - Kahn said that this was one of the biggest ever IMF governance reform, the agreement of great historical significance. According to the agreement, EU countries will in the IMF Executive Board for the two seats for developing countries. IMF Executive Board is currently a total of 24 seats, the EU accounted for 8 seats. Belgium and the Netherlands reported that this reform is likely to become a "victim."
Restrictions on U.S. trade surplus has not increased domestic demand and promoting China
Exchange rate issues, the statement said to be "determined by the market exchange rate towards the" avoid competitive devaluations, G20 reiterated rejection of any form of trade protectionism, while the current account to help maintain a sustainable level of policy, then solve the imbalance in world trade, but not like Geithner like to set the trade surplus quota. In addition, participants agreed to strengthen the global financial supervision, stricter supervision of banks and large financial institutions.
Geithner not named after the requirements of China and other countries to enhance domestic demand to help balance the global economic growth. Chinese Ambassador Li Baodong said yesterday that China supports the G20 and the United Nations to strengthen coordination and cooperation. http://paper.wenweipo.com/2010/10/24/GJ1010240001.htm
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