FX Guidelines Delayed to Paris G-20 Summit in `11

Leaders of the world’s 20 major economies agreed Friday to formulate indicative guidelines for current account imbalances by next year’s first half and to evaluate their progress at the next G-20 summit in Paris in November next year.

They also agreed to seek more market-determined foreign exchange rate systems, enhance exchange rate flexibility, and refrain from competitive devaluation of currencies.

The G-20 Seoul summit endorsed an action plan in the joint communiqué issued Friday afternoon before the end of the summit.

Though the summit failed to set details for the guidelines, specific dates and main agents to reach an accord were determined. This is considered progress from the communiqué reached at the end of the G-20 finance ministers meeting in Gyeongju last month.

The guidelines will be devised by international organizations including the International Monetary Fund, and consist of measures for current account, fiscal matters, finance, structural reform and foreign exchange rates.

President Lee Myung-bak told a news conference after the end of the summit, “For now, the world has avoided a so-called currency war,” adding, “Concrete guidelines will be made and evaluated by the first half of next year so that G-20 leaders can finalize the issue by the next summit.”

Calling the timetable "remarkable progress," he said that when evaluations are made to the indicative guidelines made by the working group, the global economy will stabilize.

On the creation of a global financial safety net, G-20 leaders agreed to introduce a synchronized approval system for the IMF’s financial credit line for multiple countries through which countries impacted by a common shock can concurrently seek access to loans.

President Lee said, “In a global financial system, even a nation with sound economic fundamentals can experience economic crisis due to a temporary shortage of foreign currency. It is a big change in that the IMF is expanding its role to crisis prevention as well as crisis resolution.”

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