Global imbalances a most vital finance topic at G20 Paris meeting

16:10, February 18, 2011      

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The Group of 20 finance ministers and central bank governors aim to hammer out common criteria for measuring global economic imbalances at a gathering on Friday and Saturday that host France hopes will lead to an overhaul of world finance.

In addition to finance ministers or central bank governors, representatives of Spain, Ethiopia, Equatorial Guinea, Saudi Arabia and Singapore and leaders of more than international agencies or institutions have been invited to attend as non-voting delegates to discuss the current global economic issues and work to seek countermeasures to address the related tough financial problems.

The ongoing two-day summit on February 18 and 19 comes a week after the International Monetary Fund (IMF) ramped up the debate over the future of the US dollar.

Host Christine Lagarde, the French finance minister, has the task to picking up the pieces of the group of 20 summit last November. The primary goal of this weekend's Group of 20 Summit, she said, is "how to get help without appearing helpless. To (cope with) the world's financial meltdown -- is the primary goal of this conference."

The reform of the postwar international monetary and finance system is another key point of the conference, noted Christine Lagarde, and France wants new global finance system as the nation hopes that the present monetary system will transit step by step to the "internationalization of new currency" through the means to strengthening the role of special drawing right (SDR) system, the wholesale funding and international capital flow, which could help ensure the future financial stability.

French President Nicolas Sarkozy said the advancement of the international monetary system reform has manifested the trend of the new global economic growth and is aimed precisely to reduce the excessive dependence on the US dollar and enable the currencies of emerging economies to pay a more important role.

Central Bank representatives of the United States, China, Japan, Britain and the eurozone are expected to confer on the subject "global imbalance and financial stability." All parties will seek, through their financial adjustment, step up the management of capital flow, contain exchange rate war, reduce the exposure to currency fluctuations, further improve financial assistance, and promote global economic growth.

The international monetary system reform is one of the focal issues at the current G20 finance ministers and central bank governors Paris meeting, said Yuan Zengting from the Finance Research Institute of the Chinese Academy of social Sciences (CASS). The US dollar Index fell sharply and reached a new low in early 2008 and, since the eruption of global finance crisis in that year, the dollar index has fluctuated dramatically from the 70-90 range, Yuan acknowledged. And this kind of the hedging exchange rate risk is worrisome under the international monetary system pegged to the US dollar, as it also does not adapt to the unruly economic regulation rhythms and sovereign rate conditions. So, it is more urgent to seek more objective data and to advance the reform of the international monetary system multiplication and the exchange rate stabilization mechanism reform.

And it is also an imminent economic subject to address the rise of the crude oil and food price worldwide. In the field of stabilizing the stable bulk commodities price, the conference's host nation, France, insisted that the G20 finance ministers and central bank governors' meeting should also have a fuller role to play by presenting concrete proposals to the related organizations to halt the price distortion from causing harms to producers and consumers.

Food grain price has kept soaring along with fluctuations on the bulk commodities market, noted Ding Shengjun, a researcher at the China National Cereals, Oils and Foodstuff Bureau, in a recent interview with PD reporters. This is owed to frequent national or industrial disasters and partial political upheavals on the one hand and, on the other hand, it is because of an unfair international economic order shaped by the erroneous economic policies by some developed economies.

Due to complex and multiple reasons, all parties at the Paris meeting should, through taking the conference as the turning point, seek to set up a range of response measures for stabilizing grain prices via international cooperation and, only through such cooperation can the mutual benefit of a win-win result be achieved.

By People Daily Online and its author PD reporter Ding Xiaoxi and PD resident reporter in France Gu Yuqing
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