South Korea braces for fallout from currency war
Global squabbles over exchange rates have emerged as a key concern for South Korea, as policy makers struggle to battle strong headwinds from Japan’s expansionary monetary policy.
A Bank of Korea report on Monday showed conflicts over currencies listed for the first time among the top five risks facing the country’s financial system, while concerns about China’s economic hard-landing and a delayed recovery in the US economy have subsided. Continue reading »
Guest post: Short-termism must be overcome so EMs can invest long-term
By Bernd Braasch of the Bundesbank
The financial crisis has clearly revealed a growing emphasis on short-termism in international finance, just when the global economy needs a new financial architecture in which long-term finance and sustainability play a central role. Continue reading »
EMs to the IMF: it’s time
Hands up if you want more votes
It’s been on the cards for a long time now, but with China and others stumping up this week for the International Monetary Fund’s warchest, are the major emerging markets finally about to get a bigger say in the Fund’s management?
For as long as beyondbrics has been around, the issue of votes and quotas – not to mention the cosy deal between the US and Europe allocating the top jobs at the IMF and World Bank – has been a sore point. Is this the moment of change? Continue reading »
Guest post: inequality must not be forgotten at the G20
By Barbara Stocking of Oxfam
World leaders will have much more on their plates than the traditional G20 banquet when they meet in Los Cabos this week.
For many, the G20’s job will have been done if economic meltdown in Europe is averted and the rest of the world spared the consequences. Oxfam – which was formed in 1942 in response to the hardship faced by Greeks during the wartime blockade – is anxious to see leaders take concerted action to reduce the suffering of people across the continent who bear no responsibility for the current crisis. Continue reading »
Mexico: ‘press for G20/G7 reform’
Mexico, led by president Felipe Calderon (pictured), should use its G20 presidency to push for a streamlined membership and a radical overhaul of the G7 at its core, an influential voice in global economics has said.
In an interview with the FT, Jim O’Neill, chairman of Goldman Sachs Asset Management, said that a new-look G7 could consist of the US, Japan, a single seat to represent eurozone countries, and the four so-called Bric nations of Brazil, Russia, India and China. Continue reading »
China fears spook markets
The surge in emerging markets that began in the summer could not go on for ever. And it has been broken by fears of a Chinese interest rate rise that sent Shanghai stocks plunging over 5 per cent and triggered a wider sell-off in emerging markets and commodities.
Investors ignored the fact that the G20 leaders managed to set aside their bickering over economic imbalances and put together a vague final communique. Instead they focused, quite rightly, on China’s biggest immediate challenges – the risks of rapid credit growth, asset bubbles and inflation. Continue reading »
Greenspan makes life more difficult
With Alan Greenspan putting the boot into US policymaking, the G20 summit in Seoul did not got off to the best start.
Tim Geithner, US treasury secretary, was forced to deny the former Federal Reserve Board chairman’s claims that Washington was “pursuing a policy of currency weakening”. Geithner retorted that the US would never deliberately push down the dollar to boost exports.
Even though the 84-year-old Greenspan is nowhere near South Korea, the spat will do little to improve the atmosphere in Seoul, where delegations are struggling to coordinate policy. Continue reading »
S Korea wants to be the perfect host – but success is out of its hands
South Korea’s expectations of the G20 summit in Seoul are astronomic. Over the last year, breathless officials have claimed the meeting is “bigger than the Olympics” of 1988 and will do more to establish South Korea’s global reputation than the 2002 football World Cup, which it co-hosted with Japan. Thinktanks have estimated how many billions of dollars the G20 will attract – and the figures are from cloud cuckoo land.
The giddy excitement is easily understood. This is South Korea’s first outing as a diplomatic leader – its chance to escape the shadows of China and Japan. But the country’s political and business elites have misunderstood the national branding exercise. Continue reading »
India reveals its hand on a global bank tax
India has kept its hand well hidden at the table of the G20′s deliberations over how to prevent another global financial crisis. So the acknowledgement by Pranab Mukherjee, the country’s finance minister, that a bank tax is no alternative to better regulation is illuminating.
Senior Indian policymakers have been non-committal about International Monetary Fund-backed proposals for a global banking tax. They were similarly muted when Gordon Brown, the former UK prime minister, claimed to have gained wide support among the G20 countries for a global banking tax to fund future bail outs. The UK Treasury was seeking out India as a key ally. Continue reading »
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