PARIS — Finance chiefs of the world’s dominant economies were close to agreeing on how to track dangerous imbalances in the global economy, part of the Group of 20’s efforts to prevent another financial crisis.
European Union Monetary Affairs chief Olli Rehn said he was confident that there would be agreement “to identify and address global imbalances,” but that discussions on the precise indicators were still continuing.
The talks Friday focused on coming up with a list of indicators to measure imbalances: current accounts, real effective exchange rates, currency reserves as well as public and private debt levels, Rehn said. Current accounts measure trade and capital flows into and out of a country.
Germany’s Deputy Finance Minister Joerg Asmussen said a majority of countries supported sticking to those five indicators. China, in particular, has so far opposed targeting exchange rates as it has resisted letting its own currency, the yuan, appreciate more quickly against the dollar.
French Finance Minister Christina Lagarde warned that a failure to address imbalances “leads us straight into the wall of another debt crisis.” President Nicolas Sarkozy said countries must not get complacent, because big parts of the world are starting to recover from the crisis and had championed the G20 as the new platform for global decision-making.
“That would be the death of the G20,” Sarkozy warned.
France has set an ambitious agenda for its G20 presidency in an attempt to revive the grouping, after a meeting of heads of state in Seoul last year failed to come up with specific yardsticks for measuring imbalances. But the year’s first gathering in Paris left many of the more difficult questions to be decided at later meetings.
In their working groups today, officials will not even attempt to set firm limits for when imbalances actually become dangerous.
