G20 addresses currency disputes, adopts Gyeongju Communique

Finance ministers and central bank governors from G20 member nations decided on October 23 to implement market-determined exchange rate policies and refrain from competitive currency devaluations.

They decided to reduce trade imbalances by imposing sustainable levels of trade surpluses and deficits, enact reforms for the International Monetary Fund (IMF), and allow the IMF to play a more active role in the international monetary and financial system.

Their proposals also include shifts in IMF quota shares of industrialized countries to dynamic emerging markets, developing countries, and underrepresented countries.

After the two-day G20 Finance Ministers and Central Bank Governors’ Meeting, which was held in Gyeongju, Gyeongsangbuk-do, the participants made an official announcement of the “Gyeongju Communique”.

Finance ministers and central bank governors from G20 member nations listen to President Lee Myung-bak’s welcoming speech at the G20 Finance Ministers and Central Bank Governors' Meeting, which was held on Oct. 22 in Gyeongju, Gyeongsangbuk-do.

This gathering was originally designed to review and coordinate key agendas for the upcoming G20 Seoul Summit, scheduled to take place on November 11-12. However, currency issues sparked strong interest at the meeting, as many countries are discussing currency re-evaluations to address currency account deficits.

As chair, Korea played an active role in mediating currency issue conflicts among member nations.

Meeting attendees agreed to implement market-determined exchange rate policies and refrain from competitive devaluation of currencies in order to better reflect economic fundamentals.

At a press conference after the meeting, Korean Minister of Strategy & Finance Yoon Jeung-hyun said, “The soundness of the overall economy will be bolstered and the role of the market will be strengthened, since the G20 decided in the communique to implement a ‘market determined exchange rate system,’ rather than a ‘market-driven system,’ which will help end the currency dispute.”

Minister of Strategy & Finance Yoon Jeung-hyun (center) at a press conference after the G20 Finance Ministers and Central Bank Governors' Meeting in Gyeongju, Gyeongsangbuk-do, on Oct. 23.

 The meeting attendees also discussed currency account issues, which are closely related to exchange rates. They agreed in the communique that the G20 will “pursue the full range of policies conducive to reducing excessive imbalances and maintaining current account imbalances at sustainable levels.”

They also decided to review IMF quotas in order to better reflect the current economy, and to complete the next regular review of quotas by January 2014.

The members also committed themselves to fully implement a new bank capital and liquidity framework, drawn up by the Basel Committee.

Source : http://korea.net

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