In Paris, during the G20 summit, he will essentially issue of imbalances in the global economy. But the G20 central bankers will also discuss raw materials and exchange rate policy.
For two days, finance ministers of the club of the 20 richest states accompanied by the presidents of their respective central banks will try to harmonize their violins.But political differences and strong business fueled by the turmoil caused by the economic crisis may clutter the discussion.
The three points of contention that the G20 Finance:
- The global economic imbalances
One of the issues of this summit is to assess the reality of economic disparity between the G20 countries to better redistribute the fruits of global growth. The goal is laudable, but to reach the participants at the G20 in Paris will have to agree on concrete indicators.
This is where things could get tougher.Five possible criteria have been identified: current account balance, real exchange rates, foreign exchange reserves, deficit and public debt, and private savings. One particularly problematic: the balance of current accounts in which the trade balance plays an important role. States like China or Germany fear that eventually they blame their strong exports. The French Minister of Economy Christine Lagarde, has already started clearing the ground Thursday at a conference in Paris organized by the Institute of International Finance. "What we do not want is to tell any country: stop being competitive, stop exporting," she said.It evokes rather "guidelines" ... more consensual and more blurred.
- The regulation of commodity markets
French President Nicolas Sarkozy will hold. He wants to make the fight against speculation in commodity markets its workhorse at the head of the G20. "There will be a debate about it," he confirmed the French Finance Minister Christine Lagarde.
But the debate is likely to be stormy, for the role of speculation in the surge in commodity prices is not consensus. Early 2011, a study by the European Commission concluded that there was no correlation between the two.Countries like Brazil and Argentina, leading producers of raw materials are, moreover, strongly opposed to regulation of prices and fear that France is trying to impose one. So, Christine Lagarde had again put water into wine Nicolas Sarkozy. "It does not propose a price administration, not at all," she said without specifying what France wanted.
- Policy Exchange
The war being waged for nearly a year the United States and China on the undervaluation of the yuan remains a central concern. In this regard, Christine Lagarde reiterated that China "should let its currency appreciate more freely."But for Beijing not to input summit in the dock, she returned with another idea to which China is more favorable.
So France should advocate a greater role for the Yuan. It should propose that the Chinese currency is part of IMF's currency basket - called Special Drawing Right - which is replacing gold in large international transactions. One way for France to indicate that the Chinese currency should be treated with the same consideration as the dollar.
