ID :
172284
Thu, 03/31/2011 - 18:33
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Shortlink :
https://oananews.org//node/172284
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G-20 informally seeks China's wider role in global finance
NANJING, China (Kyodo) - Finance ministers, central bankers and academics from the Group of 20 developed and developing economies reached informal consensus Thursday that the Chinese currency should increase its role in the international monetary system in reflection of the country's growing economic clout.
Delegates to a one-day meeting in Nanjing in eastern China agreed on the need to consider including the yuan in the special drawing right, a quasi-currency the International Monetary Fund uses as its unit of account. The SDR is now composed of the dollar, euro, yen and pound.
''My sense is that we should begin work to study the inclusion of additional currencies in the basket of currencies that are used for the special drawing right,'' French Finance Minister Christine Lagarde said at a press conference after the G-20 High-Level Seminar on the International Monetary System.
''There is nothing to stop us from studying. So that could start shortly,'' Lagarde said, calling for an increased role for the SDR as an international reserve asset.
France has made reform of the global monetary system one of the key themes of its yearlong presidency of the G-20 and the Group of Eight countries, along with reducing economic imbalances and volatility in commodity prices.
''We must accompany the inevitable internationalization of the great global currencies,'' including the yuan, French President Nicolas Sarkozy said in an opening address to the seminar that was also attended by European Central Bank President Jean-Claude Trichet, People's Bank of China Governor Zhou Xiaochuan and Rintaro Tamaki, Japan's vice finance minister for international affairs.
''This does not, of course, mean challenging the important role of the dollar and the euro, which must be stable currencies,'' Sarkozy said.
The Nanjing gathering paves the way for a meeting of G-20 finance ministers and central bank governors around mid-April in Washington and subsequent events in the run-up to a G-20 summit in November in Cannes in southern France.
U.S. Treasury Secretary Timothy Geithner and other delegates cited a currency's convertibility, flexibility and independence of its central bank as criteria for inclusion of a currency in the SDR, sparking speculation it will take some time before the yuan would be included.
Although China had ruled out discussion of its currency policy in Nanjing, Geithner and Sarkozy indirectly called for faster appreciation of the yuan, which the United States and Europe say is undervalued and gives Chinese exporters an unfair advantage in international trade.
''Most major emerging economies now operate largely flexible exchange rate regimes, with very open capital accounts. Some emerging markets run tightly managed exchange rate regimes with very extensive capital controls, though this is starting to change,'' Geithner said.
''This asymmetry in exchange rate policies creates a lot of tension,'' he said, according to a text of remarks provided to journalists. ''It intensifies inflation risk in those emerging economies with undervalued exchange rates.''
Geithner said the mismatch between fixed and floating exchange rates is the most important issue to be addressed in the international monetary system now.
Meanwhile, Sarkozy offered support to Japan in the nuclear field amid fears of radioactive leaks from a crippled nuclear power plant in the wake of the March 11 earthquake and tsunami that devastated northeastern Japan.
France is the world's most advanced, nuclear-dependent country, with nuclear plants supplying about 75 percent of its power demand.
Sarkozy also called for stability in exchange rates, saying the yen's surge after the quake and tsunami was ''unacceptable'' as it deviated from economic fundamentals.
''The action of the G-7 on the yen enabled us to counter speculation disconnected from fundamentals, which threatened to exacerbate the difficulties of our Japanese friends at a time when they are confronted with events of extraordinary gravity,'' he said.
He was referring to joint currency market intervention by the Group of Seven industrialized countries March 18 after the yen rose to the highest level against the dollar since the end of World War II.
The Group of Eight comprises the G-7 -- Britain, Canada, France, Germany, Italy, Japan and United States -- plus Russia.
Policymakers and financial markets have grown concerned that uncertainty in the Japanese economy in the wake of the nuclear crisis may pose a downside risk to the global economy, as may instability in the Middle East, including in Libya, and sovereign debt woes in Europe.
Representing about 80 percent of global gross domestic product, the G-20 groups Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States and the European Union.
Delegates to a one-day meeting in Nanjing in eastern China agreed on the need to consider including the yuan in the special drawing right, a quasi-currency the International Monetary Fund uses as its unit of account. The SDR is now composed of the dollar, euro, yen and pound.
''My sense is that we should begin work to study the inclusion of additional currencies in the basket of currencies that are used for the special drawing right,'' French Finance Minister Christine Lagarde said at a press conference after the G-20 High-Level Seminar on the International Monetary System.
''There is nothing to stop us from studying. So that could start shortly,'' Lagarde said, calling for an increased role for the SDR as an international reserve asset.
France has made reform of the global monetary system one of the key themes of its yearlong presidency of the G-20 and the Group of Eight countries, along with reducing economic imbalances and volatility in commodity prices.
''We must accompany the inevitable internationalization of the great global currencies,'' including the yuan, French President Nicolas Sarkozy said in an opening address to the seminar that was also attended by European Central Bank President Jean-Claude Trichet, People's Bank of China Governor Zhou Xiaochuan and Rintaro Tamaki, Japan's vice finance minister for international affairs.
''This does not, of course, mean challenging the important role of the dollar and the euro, which must be stable currencies,'' Sarkozy said.
The Nanjing gathering paves the way for a meeting of G-20 finance ministers and central bank governors around mid-April in Washington and subsequent events in the run-up to a G-20 summit in November in Cannes in southern France.
U.S. Treasury Secretary Timothy Geithner and other delegates cited a currency's convertibility, flexibility and independence of its central bank as criteria for inclusion of a currency in the SDR, sparking speculation it will take some time before the yuan would be included.
Although China had ruled out discussion of its currency policy in Nanjing, Geithner and Sarkozy indirectly called for faster appreciation of the yuan, which the United States and Europe say is undervalued and gives Chinese exporters an unfair advantage in international trade.
''Most major emerging economies now operate largely flexible exchange rate regimes, with very open capital accounts. Some emerging markets run tightly managed exchange rate regimes with very extensive capital controls, though this is starting to change,'' Geithner said.
''This asymmetry in exchange rate policies creates a lot of tension,'' he said, according to a text of remarks provided to journalists. ''It intensifies inflation risk in those emerging economies with undervalued exchange rates.''
Geithner said the mismatch between fixed and floating exchange rates is the most important issue to be addressed in the international monetary system now.
Meanwhile, Sarkozy offered support to Japan in the nuclear field amid fears of radioactive leaks from a crippled nuclear power plant in the wake of the March 11 earthquake and tsunami that devastated northeastern Japan.
France is the world's most advanced, nuclear-dependent country, with nuclear plants supplying about 75 percent of its power demand.
Sarkozy also called for stability in exchange rates, saying the yen's surge after the quake and tsunami was ''unacceptable'' as it deviated from economic fundamentals.
''The action of the G-7 on the yen enabled us to counter speculation disconnected from fundamentals, which threatened to exacerbate the difficulties of our Japanese friends at a time when they are confronted with events of extraordinary gravity,'' he said.
He was referring to joint currency market intervention by the Group of Seven industrialized countries March 18 after the yen rose to the highest level against the dollar since the end of World War II.
The Group of Eight comprises the G-7 -- Britain, Canada, France, Germany, Italy, Japan and United States -- plus Russia.
Policymakers and financial markets have grown concerned that uncertainty in the Japanese economy in the wake of the nuclear crisis may pose a downside risk to the global economy, as may instability in the Middle East, including in Libya, and sovereign debt woes in Europe.
Representing about 80 percent of global gross domestic product, the G-20 groups Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States and the European Union.
