Sunday, October 10, 2010

Currency Wars: Meeting Ends in Disarray, Global Economic Cooperation Is In Tatters

The Financial Times reports that "global economic co-operation was in tatters" after this weekend’s meetings of gloabl finance ministers and central bankers broke up with no resolution.

"Further battles in the currency war looked likely".
"The world’s largest economies remained as far apart as ever on currencies. China accused the US of destabilising emerging economies by allowing ultra-loose monetary policy to flood the emerging world with money, while the US insisted the International Monetary Fund should intensify its focus on exchange rates and the reserve accumulation of China".

Tim Geithner, US Treasury secretary: “The IMF must strengthen its surveillance of exchange-rate policies and reserve accumulation practices,”.

"This pressure on China is now being met with stiffer resistance. Zhou Xiaochuan, China’s central bank governor, told the IMF meeting the focus on currencies was one-sided". “The continuation of extremely low interest rates and unconventional monetary policies by major reserve currency issuers have created stark challenges for emerging market countries in the conduct of monetary policy.”

"Other finance ministers told the Financial Times of their despair at the intransigence of both sides".

Nothing unexpected here - at all.

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