Amid worldwide concerns on protectionism and currency wars, US treasury secretary Timothy Geithner said on Monday he was confident that a consensus can be hammered out for a global trade “rebalancing plan” in the G20 summit of elite economies that begins later this week in Seoul.
The two-day summit begins on Thursday.
The US has proposed a model that would allow the International Monetary Fund (IMF) to frame guidelines to set up an early warning system to distortions in global trade.
“I am very confident you are going to see very strong consensus on this basic framework,” Geithner told business leaders at a meeting organised by the Confederation of Indian Industry (CII) to mark US President Barack Obama's visit.
“What we have proposed is a framework which incorporates early warning indicators of large surpluses or deficits which can then be monitored,” Geithner said. He made it clear that the US would not press for imposing specific targets to address global trade imbalances.
“You can’t set quantitative targets for external balances —it makes no economic sense,” he said.
Geithner had written to G20 counterparts to change exchange rate policies in those nations that are running major trade surpluses. Though he did not mention nations, that is seen as targeting China.
G20 leaders are likely discuss an incipient “currency war” among nations, surge in capital inflows to emerging countries, financial stability of banks and the timing of withdrawing of the stimulus measures announced by various governments to counter the global economic downturn in 2008.