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Moscow G20 controversies

February 15, 2013

The group of the world's 20 major economies has been trying to formulate joint policies with regard to future public spending and growth incentives. But, at the meeting in Moscow, exchange rate policies also play a role.

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In the run-up to a meeting of financial officials from the G20 major economies in Moscow on Friday and Saturday, leading participants said a lot of work needed to be done to arrive at a common policy on currency exchange rates and whether to influence them or not.

The Moscow gathering looked likely to be dominated by controversy over Japan's recent expansive moves to drive down the value of the yen so as to boost domestic exports.

The policy by many industrialized nations of artificially pumping money into their banking systems has raised the prospect of competitive devaluations as countries sought to foster foreign demand by engineering weaker currencies.

Fiery debates expected

European Central Bank President Mario Draghi said in Moscow that he considered any loose talk on currencies as "inappropriate, fruitless and self-defeating."

At a joint news conference with Sergey Ignatiev, the chief of Russia's central bank, Draghi insisted that there had been no attempt to influence exchange rates on the part of the ECB. "Influencing exchange rates is no objective of the ECB's monetary policy," he said. "But our monetary policy is important for price stability and economic growth."

G20 seeks common ground

The Moscow meeting was also expected to see the continuation of a long-brewing row between Europe and the US over budget consolidation and growth incentives.

hg/mkg (dpa, Reuters)