Feb. 6 (Bloomberg) -- Major economies with inflexible currencies must consider strengthening them if the global economy is to be weaned off its dependence on U.S. spending and Asian savings, according to a report prepared for a meeting of finance chiefs from the Group of Seven. "Countries with inflexible nominal exchange rates must permit greater flexibility in real exchange rates either through higher inflation or a nominal appreciation of their currency," the document, drawn up by Canada's Finance Ministry and obtained by Bloomberg News, said. G-7 finance ministers and central bankers are meeting in Iqaluit, Canada, today as policy makers seek to avoid a widening of distortions such as the U.S. trade deficit and the Chinese current-account surplus, which economists blame for helping deepen the worst postwar worldwide recession. "While global imbalances were not the primary cause of the financial crisis, there is little doubt that they were an important contributor to the recession we faced," the G-7 document said. "For global growth to be sustainable, it must be balanced." The report doesn't mention which countries are viewed as having inflexible currencies. China has attracted criticism this year from foreign governments for limiting gains in the value of its yuan since July 2008 after it strengthened 21 percent against the dollar over the previous three years.
Feb. 6 (Bloomberg) -- Major economies with inflexible currencies must consider strengthening them if the global economy is to be weaned off its dependence on U.S. spending and Asian savings, according to a report prepared for a meeting of finance chiefs from the Group of Seven.
"Countries with inflexible nominal exchange rates must permit greater flexibility in real exchange rates either through higher inflation or a nominal appreciation of their currency," the document, drawn up by Canada's Finance Ministry and obtained by Bloomberg News, said.
G-7 finance ministers and central bankers are meeting in Iqaluit, Canada, today as policy makers seek to avoid a widening of distortions such as the U.S. trade deficit and the Chinese current-account surplus, which economists blame for helping deepen the worst postwar worldwide recession.
"While global imbalances were not the primary cause of the financial crisis, there is little doubt that they were an important contributor to the recession we faced," the G-7 document said. "For global growth to be sustainable, it must be balanced."
The report doesn't mention which countries are viewed as having inflexible currencies. China has attracted criticism this year from foreign governments for limiting gains in the value of its yuan since July 2008 after it strengthened 21 percent against the dollar over the previous three years.
I'm perennially baffled by the occasional phenomenon of American officials publicly complaining about China's currency policy. After all, what kind of a world are we living in when a great nation can't think of a way to devalue its own money? Larry Summers is a brilliant economist, but he can't think up a better way of making this happen then asking the Chinese nicely (or not-so-nicely) then maybe he ought to step aside and let someone stupid take the helm. Maybe it's just that I have no idea what I'm talking about, but I actually feel confident that if Barack Obama put someone who doesn't know what he's talking about (me, say) in charge and give me a mandate to devalue the dollar I could get the job done.
Finance ministers from seven of the world's biggest economies concluded a meeting in the Canadian Arctic on Saturday with pledges to maintain their fiscal stimulus programs, despite rising worries among investors about the mounting debts of some European governments. "We are all absolutely committed to maintaining the support for our economies until we make sure that we have recovery established," Alistair Darling, Britain's chancellor of the Exchequer, said in Iqaluit, Nunavut, where finance ministers and central bankers from the Group of 7 nations were meeting. The European debt crisis, and its spread from Greece to other countries in the euro zone like Portugal, Spain and Italy, were a focus of the two-day talks. "The European authorities gave us a very comprehensive review of the program now in place to address the challenges faced by the Greek economy," the United States Treasury secretary, Timothy F. Geithner, told reporters. He added that the officials had assured the group that they would manage the problem "with great care."
Finance ministers from seven of the world's biggest economies concluded a meeting in the Canadian Arctic on Saturday with pledges to maintain their fiscal stimulus programs, despite rising worries among investors about the mounting debts of some European governments.
"We are all absolutely committed to maintaining the support for our economies until we make sure that we have recovery established," Alistair Darling, Britain's chancellor of the Exchequer, said in Iqaluit, Nunavut, where finance ministers and central bankers from the Group of 7 nations were meeting.
The European debt crisis, and its spread from Greece to other countries in the euro zone like Portugal, Spain and Italy, were a focus of the two-day talks.
"The European authorities gave us a very comprehensive review of the program now in place to address the challenges faced by the Greek economy," the United States Treasury secretary, Timothy F. Geithner, told reporters. He added that the officials had assured the group that they would manage the problem "with great care."
The Group of Seven leading economies have pledged to cancel Haiti's debt in the wake of last month's crippling earthquake. Canadian Finance Minister Jim Flaherty made the announcement yesterday following a two-day gathering of G7 finance ministers. "The debt to multilateral institutions should be forgiven and we'll work with these institutions and other partners to make this happen as soon as possible," he said. Mr Flaherty said members had also discussed possible long-term assistance for the impoverished country, although he did not mention any figures.
The Group of Seven leading economies have pledged to cancel Haiti's debt in the wake of last month's crippling earthquake.
Canadian Finance Minister Jim Flaherty made the announcement yesterday following a two-day gathering of G7 finance ministers.
"The debt to multilateral institutions should be forgiven and we'll work with these institutions and other partners to make this happen as soon as possible," he said.
Mr Flaherty said members had also discussed possible long-term assistance for the impoverished country, although he did not mention any figures.
