- Special Pages
MOSCOW: Finance ministers from G20 states gathered yesterday in Moscow for their first meeting in the Russian capital aimed at reassuring markets that the world’s economic powers would not slug it out in “currency wars” to boost national growth.
The troubles of the debt-ridden eurozone will for the first time in several international meetings not be centre stage, with the main concern expected to be Japan’s controversial plan for “monetary easing” that weakens the yen.
President Vladimir Putin addressed the finance ministers of the G20 before closed-door talks in the afternoon that will continue today.
“We do not want state intervention in exchange rates. We want exchange rates that are determined by the markets,” German Finance Minister Wolfgang Schaeuble told German Radio ahead of the talks.
“I am actually very confident that will also be the joint position of all G20 countries in Moscow,” Schaeuble added in an interview on Germany’s Inforadio.
The two-day G20 meeting, being hosted by Russia for the first time as it holds the presidency of the world’s leading economies, is a prime chance for Moscow to present itself as a reliable global economic player.
Russia has set itself the task during its presidency — which will culminate in the G20 summit from September 5-6 in Saint Petersburg — to launch a “new cycle of growth” through investment, transparency and regulation.
But economists fear that currency devaluations — making the national currency cheaper to stimulate exports and domestic activity — could prove too tempting if governments see no other way out.
The Japanese answer to the US policy of quantitative easing — the buying by the central bank of bonds held by banks to increase the quantity of money in the economy — would be aimed at helping Japan reach an inflation target of 2.0 percent after years of deflation.
Under heavy pressure from new Prime Minister Shinzo Abe and his ruling Liberal Democratic party, Japan’s central bank last month announced plans for monetary easing which immediately pushed down the yen.
But the Secretary General of the Organisation for Economic Co-operation and Development (OECD) Angel Gurria denied that a currency war was in progress, saying everyone wanted Japan to rid itself of the curse of deflation.
“There is no currency war. We are further today away from a currency war than we were two years ago or three years ago,” he said in Moscow.