MOSCOW – G20 summits don't always set the pulse racing but this week's gathering of finance ministers and central bankers in Moscow has a better chance than most of grabbing the attention of financial markets. Emerging powers are flexing their muscles about the impact of a strong dollar. Brazil has been liaising with Beijing over ways to limit the effects of the dollar's rise on their economies though it is not clear what can be done or whether the BRICS (Brazil, Russia, India, China and South Africa) can offer a united front. “We are working to enable closer cooperation in many aspects, including possible swap transactions,” Russian Finance Minister Anton Siluanov, who will host the Thursday/Friday summit, told Reuters. “The process continues, but not fast.” The policymakers meet at a sensitive time with the US Federal Reserve intent on slowing, then exiting a bond-buying program that has been creating $85 billion a month, and Beijing trying to rebalance the world's most dynamic economy. Chinese growth slowed only moderately in the second quarter and after causing ructions in world financial markets, Fed Chairman Ben Bernanke has been at pains to stress he will only halt the money-printing presses if he sees stronger evidence of US recovery. Nonetheless, the Group of G20 leading economies will seek reassurances that neither will upset the apple cart. A preliminary draft of the plan, seen by Reuters, showed the organization has already identified a number of specific profit shifting schemes and aims for agreement on specific changes to international tax rules in one to two years. A G20 official said the ministers would endorse the OECD plan while labor and finance ministers will issue a statement on balancing job creation policies with efforts to cut debt. The balance between austerity and growth remains a contentious theme as does Germany's call for concrete debt reduction targets to follow up on goals set three years ago. “The US is getting more and more angry about Europeans, who they think are not doing enough for growth,” the official said. In a tit-for-tat, the EU paper seen by Reuters said the lack of agreement on a credible medium-term fiscal consolidation plan in the United States was a risk to the global economy. The G20 has not been able so far to agree on binding targets to reduce borrowing to follow on from a deal struck in Toronto in 2010, and officials said any hopes of new longer-term debt goals were receding fast. – Reuters
