Paris Statement from G20 Finance Ministers and Central Bank Governors

February 19, 2011

After meeting on February 18th and 19th, the Group of Twenty finance ministers and central bank chiefs released a four-page statement that

  • Assessed the global economy to be recovering unevenly and with continuing downside risks,
  • Reflected China’s isolation in the debate over proper currency policy,
  • Identified broad indicators – public debt, fiscal deficits, private savings and debt, and both external imbalances and the components of those imbalances (trade, net income flows, and transfer payments) that will serve as non-binding measures in monitoring progress in trimming external imbalances to sustainable level,
  • Set deadlines of April 20 to determine quantitative guidelines against which to measure how those indicators are trending and October 2011 for securing an IMF assessment of the sustainability and internal consistency of the G20’s Mutual Assessment Process ,
  • Reaffirmed a goal of avoiding disorderly foreign exchange market conditions,
  • Discussed commodity price volatility, financial sector reform, and the merits of freer trade and investment flows,
  • And pledged the group’s support for Egypt and Tunisia.

The paragraph on growth reads, “The global recovery is strengthening but is still uneven and downside risks remain. While most advanced economies are seeing modest growth and persisting high unemployment, emerging economies are experiencing more robust growth, some with signs of overheating. We reaffirm our willingness to ensure a consistent and coordinated response to the challenges we face, address the root causes of the crisis and restore global economic growth on a sounder basis.”

Chinese officials managed to keep the statement from including currency reserves and inflation-adjusted trade-weighted exchange rates from the list of indicators to be monitored mutually by the group and for ensuring that the chosen yardsticks would in any case be guidelines but not mandatory targets.  On the periphery of the meetings, U.S. Treasury Secretary Geithner called the yuan undervalued.  Other officials implied that a majority consensus existed for reserves to play a role in the monitoring system.

As an exercise in international economic diplomacy – currency warfare if you will, it would appear that the French and U.S. teams accomplished more than Beijing’s. 

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.

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