The G20, in a surprise move, agreed Saturday to allow emerging nations a greater say in the International Monetary Fund and also agreed to stay away from competitive currency devaluations.
Although the U.S. tried to push through a measure that would restrain current account imbalances to 4% of GDP, the proposal failed and the U.S. came under fire from both China, at whom the measure was aimed, and Germany. The latter nation opposes the loosening monetary policy the U.S. has employed to help its domestic economy. According to a Reuters report on Sunday, Rainer Bruederle, Germany’s economy minister, said that the U.S. policy on easing was wrong, "An excessive, permanent increase in money is, in my view, an indirect manipulation of the (foreign exchange) rate.”
The two-day meeting of finance ministers in Gyeongju, South Korea, was in preparation for a G20 summit in Seoul on Nov. 11 and 12, and its primary purpose was to ward off the potential for a trade war. Emerging nations believe that the U.S., in putting so much cash into its banks, is bolstering exchange rates and asset prices, which undermines emerging nations’ export industries.