A conductor for global discord

22 October 2010 By Ian Campbell

Tim Geithner, the U.S. Treasury Secretary, urges G20 countries not to bet on currency wars to gain competitive advantage. But his fiscal, monetary and exchange rate prescriptions are mostly aimed at the yuan. It would be good if China heeds the sermon.

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Timothy Geithner, the U.S. Treasury Secretary, sent a letter to G20 finance ministers leaders ahead of their weekend meeting in South Korea, to urge them to reduce global imbalances.

Countries with deficits should boost national savings by adopting credible mediumterm fiscal targets and strengthening export performance, Geithner said. Countries with persistent surpluses should undertake structural, fiscal and exchange rate policies to boost domestic sources of growth and support global demand.

Geithner also said that countries should refrain from exchange rate policies designed to achieve a competitive advantage by either weakening their currency or preventing the appreciation of an undervalued currency.

He also suggested that the G20 call on the IMF to monitor progress towards these goals.

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