G20 vows to shun currency wars as FM Jaitley calls for strong IMF safety net
07 Sep 2015
A meeting of finance ministers and central bank governors of the Group of 20 major economies, which concluded at Ankara on 4-5 September, vowed to shun currency wars even as finance minister Arun Jaitley called for a strong IMF safety net to avert financial market volatility
Finance ministers and central bank governors of the G20, meeting for the third time under the Turkish presidency in Ankara on 4-5 September 2015, committed themselves to refrain from competitive devaluation.
The G20 finance ministers meeting in the backdrop of the devaluation of the Chinese yuan, which triggered a global market sell-off in recent weeks, dominated the deliberations and the communique issued at the end of the meeting of the G20, which include India and China.
This meeting provided an important and timely opportunity to make a comprehensive evaluation of the progress on the agenda and finance track deliverables to be submitted to G20 leaders at the Antalya Summit, and discuss actions required to achieve G20's ambitions for this year.
Leaders exchanged views on the recent global economic developments, challenges and collective measures to address them. They also reviewed the progress in monitoring and adjustment of G20 growth strategies and evaluated the way forward for G20 investment strategies.
Ministers and governors continued their meeting with the international financial architecture issues, financial regulation, international tax agenda and climate finance.
On the margins of this gathering, G20 ministers and governors had the opportunity to hear B20 representatives' perspectives on the 2015 B20 agenda and B20 recommendations to the G20 during a working dinner.
Upon the conclusion of the meeting, the agreed communiqué of the deliberations was released.
Finance minister Arun Jaitley pitched strongly for global safety nets to address concerns over volatility in currency and stock markets, a demand that came against the backdrop of the economic shocks triggered by the Chinese devaluation of yuan.
Jaitley also sought well-designed and quickly-triggered safety nets under International Monetary Fund by strengthening of the liquidity arrangements by multilateral swap arrangements between member countries to tackle negative spillovers arising from domestic action.
"When compared to the rest of the world, we seem to be on a sound footing. The other positive indication that has now come from the US is that their second quarter growth figures are good and unemployment is going down", he said
China's finance minister Lou Jiwei told the G20 that China's fiscal spending would grow faster than expected this year. A "new normal" status and the growth rate of economy is predicted to be around 7 per cent in the coming 4 to 5 years, he said.
Governor of China's central bank, Zhou Xiaochuan, pointed out in a written joint statement that the renminbi (yuan) was not on course for a long-term devaluation.
China, in a surprise move, revalued the yuan as it tried to contain the market turmoil tht caused the currency to drop the most in 21 years last month. The Shanghai Composite Index has tumbled 39 per cent since 12 June when the gauge reached its highest level in more than seven years.
Zhou, however, said, "There is no substantial transformation in the real economy of China and large surplus still remains in the foreign trade of China, so there is no foundation that remnimbi will keep devaluing for a long term,"