WORLD
G20 Vows to ease tensions over currencies
Baku, October 26 (AZERTAC). Finance ministers from the G20 nations ended two days of meetings in South Korea with a pledge to ease trade tensions that threaten global recovery. Though short on details, the informal agreement on exchange rates is seen as a step forward in defusing tensions that could lead to protectionism and possible trade wars. But without a viable enforcement mechanism, according to noted American economist Joseph Stiglitz, the pledges are nothing more than symbolic.
Under pressure to show leadership and boost cooperation on rebalancing the world economy, finance leaders meeting in South Korea vowed not to use their currencies as economic weapons to boost exports.
But without agreement on how to measure progress, South Korea`s finance minister said cooperation is crucial. "In terms of exchange rates, we decided to move towards more market-determined exchange rate systems that reflect underlying economic fundamentals and refrain from competitive devaluation of currencies," said Yoon Jeung-Hyun said.
The agreement comes amid fears that some nations are devaluing their currencies to gain a competitive edge. The U.S., for example, accuses Beijing of keeping its currency artificially weak to make Chinese goods cheaper.
But some say its not entirely China`s fault.
Nobel prize winning economist Joseph Stiglitz says U.S. policies that have driven interest rates to near record lows are also contributing to volatility. "What countries all over the world are saying today is that America`s policy of flooding the world with money, quantitative easing, is causing havoc everywhere. The money rather than going into increased lending, which it`s not, is looking around the world for the highest return," he said.
