Charlevoix G6 Summit Communique

June 10, 2018

Saturday’s statement from leaders of the Group of Seven had little to say about exchange rate policy and affirmed “the crucial role of a rules-based international trading system and continue to fight protectionism.” U.S. President Trump, who favors a Group of Eight including Russia as a more meaningful body than the Group of Seven, initially endorsed but ultimately rejected the group’s covenant of shared aspirations and broad code of conduct.

The long form of a long-held G7 foreign exchange policy had asserted:

Excess volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability. We will consult closely on exchange markets. We reaffirm our previous exchange rate commitments, including that we will refrain from competitive devaluations and we will not target our exchange rates for competitive purposes. We will resist all forms of protectionism. We will calibrate and clearly communicate our macroeconomic and structural policy actions to reduce policy uncertainty, minimize negative spillovers and promote transparency.

To say no more in the Charlevoix G7 Summit Communique than “We reaffirm our existing exchange rate commitments” is in fact tantamount to renouncing any currency market coordination at all. Annual summits of G7 leaders were inspired initially in 1975 by chaotic FX market conditions in the early stages of the floating rate era. That year in November, leaders of the Group of Six (France, West Germany, Italy, Japan, the United Kingdom and the United States) met in Rambouillet, beginning this tradition of annual summits, and the do’s and don’ts of each government’s responsibilities in foreign exchange was foremost on the agenda of the 1975 meeting. Boiling the commitment down to six non-informing words in 2018 reveals that G6 leaders must have bent over backwards to meet U.S. demands and secure Trump’s agreement to sign the statement. Alas, it was still not enough.

Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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