G20 makes headway in tackling imbalances

GYEONGJU Group of 20 financial officials on Saturday made headway in their efforts to calm currency strains and tackle trade imbalances that threaten to destabilize the global economy.

Before the two-day meeting in Gyeongju, the U.S. had proposed capping national current account surpluses and deficits as a way of reducing trade gaps while circumventing currency disputes. 

The G20 stopped short of setting specific targets in the face of resistance fromJapan, Germany and other key exporting countries.

But the issue made it into the joint statement as a crucial agenda item for further discussion in the lead up to the G20 leaders’ summit in November.

“We will strengthen multilateral cooperation to promote external sustainability and pursue the full range of policies conducive to reducing excessive imbalances and maintaining current account imbalances at sustainable levels,” the statement said.

The International Monetary Fund will devise “indicative guidelines” to assess the degree of imbalances in cases of prolonged trade surpluses or deficits.

“Persistently large imbalances, assessed against indicative guidelines to be agreed, would warrant an assessment if their nature and the root causes of impediments to adjustment as part of the Mutual Assessment Process, recognizing the need to take into account national or regional circumstances, including large commodity producers,” the Gyeongju communiqu stated.

Banknotes from different countries at the main office of the Korea Exchange Bank. (Reuters-Yonhap News)