G20 puts currency disputes to rest

GYEONGJU The U.S., Europe and leading emerging countries struck a compromise to fend off a currency dispute on Saturday by agreeing to refrain from competitive devaluations and to give newly rising powers a greater say in the International Monetary Fund.

The finance ministers and central bank chiefs from the Group of 20 avoided explicitly backing a U.S.-led proposal to set caps on national current account balances, but called on its members to keep imbalances at sustainable levels.

They adopted a joint communiqu wrapping up their two-day talks in Gyeongju, North Gyeongsang Province. The meeting was designed to set the agenda for their leaders’ summit scheduled for Nov. 11-12 and find common ground to prevent the ongoing currency battle from derailing the global recovery.

The G20 members “will move towards more market determined exchange rate systems that reflect underlying economic fundamentals and refrain from competitive devaluation of currencies,” the statement said.

It also called for advanced economies to take measures to help mitigate the risk of excessive volatility in capital flows facing some emerging countries.

“Advanced economies, including those with reserve currencies, will be vigilant against excess volatility and disorderly movements in exchange rates.”

It was the first time for the finance chiefs to deliver a common stance on currency policy.

China and other emerging economies, believed to weaken their currencies to boost exports, accepted the language as the G20 agreed to a landmark overhaul of the IMF, designed to better reflect the growing importance of the emerging economies,

The G20 agreed to transfer more than six percent of the voting rights in the IMF to rising powers including China. Europe will relinquish two of its nine seats at the 24-member Executive Board.

IMF Managing-Director Dominique Strauss-Kahn hailed it as the “biggest” reform in the fund’s history.

The G20 said the agreement will help deliver a more effective, credible and legitimate IMF and enable it to play its role in supporting the operation of the international monetary and financial system.