The United States urged G20 powers to reform their currency regimes to shore up the fragile world economy after a devastating crisis, but faced resistance to its ideas today.
G20 finance ministers and central bankers opened a two-day meeting in South Korea, stalked by warnings of an all-out "currency war" between debtor nations such as the United States and export powerhouses such as China.
Ministers from the G7 grouping of North America, Western Europe and Japan met for an hour ahead of the G20 talks, facing warnings that failure to rectify skewed economic growth could ignite 1930s-style trade protectionism.
South Korean Finance Minister Yoon Jeung-Hyun urged his G20 guests to exploit their collective heft on currency disputes, IMF reform and ensuring mega-banks cannot imperil the world economy two years after the crisis erupted.
History demanded that the G20 build "a new post-crisis international economic order", he told the meeting, looking ahead to a November 11-12 summit of leaders including the US and Chinese presidents.
Canadian Finance Minister Jim Flaherty, following talks with Chinese counterpart Xie Xuren, told reporters "there's a willingness (by Beijing) to open the door to more flexibility over time".
"I think there's a recognition that this currency issue has to be addressed. If it's not, then we know from history the path that we end up going down, which is not good for any of us," Flaherty said.
In a letter to his G20 colleagues, US Treasury Secretary Timothy Geithner urged nations running big trade surpluses to reform their exchange-rate policies. He did not name the nations but China seemed the clear target.
With a super-loose US monetary policy weakening the dollar, G20 economies such as Japan, South Korea, Brazil and Indonesia have intervened in recent weeks to curb an alarming rise in their currencies.
