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Currency Debates Emerge as Major Agenda for G20 Summit

Posted October. 01, 2010 12:06,   


Currency debates will be discussed at the fifth Group of 20 summit in Seoul in November as the heads of international organizations and leaders of developing economies urge discussion of the heated topic at the summit.

A currency war could cause a global downturn, warned IMF Managing Director Dominique Strauss Kahn to a news conference Tuesday, adding the November G20 summit will include currency as a main agenda.

Brazilian central bank governor Henrique Meirelles said, “Countries are dropping the values of their currencies on purpose to increase export competitiveness. The G20 Seoul summit should deal with the currency problem.”

The value of currencies has become an issue not just facing the U.S. and China but also most G20 countries.

The Korean government also started preparation on the matter. Sakong Il, chairman of the Presidential Committee for the G20 Seoul Summit, told reporters Thursday after a G20-related meeting at the Seoul COEX, “The currency issue will be discussed at the G20 Seoul summit. It won`t be set as a separate agenda but will be dealt with over the course of discussion on the ‘Framework for Sustainable Growth.’”

His comment indicates Seoul’s changed stance on the currency debate in a matter of days.

Strategy and Finance Minister Yoon Jeung-hyun had said Sept. 23, “The impact of currencies on the global economy can be discussed at the G20 summit but it is inappropriate to discuss the currency rate of a certain country.”

Thus, the Oct. 22-23 G20 meeting of finance ministers and central bank governors in Gyeongju, North Gyeongsang Province, will produce a framework on the principle of currency.

“We’ll move a step further from the theoretical stage that currency should reflect market fundamentals and be flexible," a source from the G20 preparation committee said. “Depending on how much China agrees with this, the level will be decided.”

All 20 member countries must agree unanimously in the G20 summit and financial ministers’ meeting so that if one country objects to specific wording, that wording cannot be included in the communiqué.

Seoul faces another big problem in the currency debate. If world leaders pay attention to this issue, it might prove tougher to coordinate the main agenda items Korea has prepared. Others are also warning that the Seoul summit could prove fruitless.

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