Mon, Oct 25, 2010 - Page 5 News List

G20 sows seeds of future forex skirmishes: analysts

AFP, GYEONGJU, SOUTH KOREA

Marco Annunziata, chief economist with Unicredit Group in London, brought attention to the inherent tension in tasking the IMF with a beefed-up surveillance role just as China is set to wield more votes on its board.

“The IMF will need to be extremely candid and outspoken, and the experience so far does not bode well: The IMF was already charged with monitoring global imbalances, but its surveillance has no teeth,” he said.

Geithner himself launched a thinly veiled attack on China’s past reluctance to allow the public release of IMF criticism of its currency policy.

Overall, Annunziata said, the G20 agreement would go “some way towards calming market fears of currency wars.”

“Whether the positive impact is durable, however, will depend on whether national policies are in fact changed to be in line with the agreement,” he said. “Otherwise this will be seen as an empty statement of principle.”

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