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France hosts finance ministers of G20 countries

February 18, 2011 - PARIS

France hosts the finance ministers and heads of the central banks of the G20 bloc of developed and major emerging economies. The ministers will follow up on the pledges made by the leaders at the close of the G20 summit of November in Seoul, particularly regarding exchange rates. They will also hear France's priorities for the G20 as its 2011 president. These focus on global monetary system reforms, the enhancement of global governance and the stabilization of prices for raw materials.

G20 leaders closed ranks at the 2010 summit and agreed to a watered-down commitment to watch out for dangerous imbalances, according to a Reuters wrap of the meeting. They agreed to move towards market-determined exchange rate and to shun competitive devaluations. The exchange rate resolution refers to China's yuan, which the United States complains is undervalued. The devaluations issue addresses other countries' concern that the United States Federal Reserve's money policy was aimed at weakening the dollar. President Nicolas Sarkozy's particular concerns include: 'moving toward more market-determined exchange rate systems, enhancing exchange rate flexibility to reflect underlying economic fundamentals and refraining from competitive devaluation of currencies," and assessing "the state of global financial imbalances." The consensus is that the imbalances will be around for some time, regardless of how hard the ministers labor, because economic worries in several G20 members make them reluctant to introduce measures that could slow their economy. Two primary documents emerged from the summit -- The G20 Seoul Summit Leaders' Declaration and The Seoul Summit Document, with annexes that included the Seoul Development Consensus for Shared Growth, the Multi-year Action Plan on Development and G20 Anti-Corruption Action Plan. A table listed the Policy Commitments by G20 Members under the International Monetary Fund's (IMF) Mutual Assessment Process (MAP). In recognition that emerging markets are struggling to contain huge capital inflows, the G20 approved "carefully designed" control measures. The G-20 is made up of the finance ministers and central bank governors of 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, Republic of Korea, Turkey, United Kingdom and the United States. The 20th member is the European Union. The body was established in 1999 as a response both to the financial crises of the late 1990s and to a growing recognition that key emerging-market countries were not adequately included in the core of global economic discussion and governance. Similar groupings to promote dialogue and analysis had been established at the initiative of the G-7. The inaugural G20 meeting took place in Berlin on 15-16 Dec 1999, hosted by German and Canadian finance ministers. (WRITTEN Nov 2011)

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Date written/update: 2011-02-18