GYEONGJU, South Korea: The world's leading advanced and emerging countries vowed Saturday to avoid potentially debilitating currency devaluations, aiming to quell trade tensions that could threaten the global economy. The Group of 20 also said it will pursue policies to reduce trade and current account imbalances, and agreed to give developing nations more say at the International Monetary Fund (IMF), part of what it described as an ambitious set of proposals to reform IMF governance. The grouping, which accounts for about 85 percent of the global economy, said in a statement that it will “move towards more market determined exchange rate systems” and “refrain from competitive devaluation of currencies”. The agreement comes amid fears that nations were on the verge of a “currency war” in which they would devalue currencies to gain an export advantage over competitors – causing a rise in protectionism and damaging the global economy. “Our cooperation is essential,” the statement said. “We are all committed to play our part in achieving strong, sustainable and balanced growth in a collaborative and coordinated way.” The agreement, which includes no specific numerical commitments, appeared to be a step forward from a similar meeting two weeks ago in Washington when finance officials failed to resolve differences. US Treasury Secretary Timothy Geithner praised the results, calling them part of necessary changes in how the global economy operates. “If the world economy is going to be able to grow at a strong, sustainable pace in the future, if we're going to be successful in building a more stable global financial system, and if we're going to be able to continue to expand opportunities for trade and preserve an open trading system, then we need to work to achieve more balance in the pattern of global growth as we recover from the crisis,” he told reporters. Geithner had pushed in a letter to G20 members for a commitment to policies that would reduce current account and trade imbalances “below a specified share” of gross domestic product “over the next few years”. But the G20 statement said that large imbalances – such as China's vast trade surplus with the rest of the world – would be “assessed against indicative guidelines to be agreed.” Geithner's proposal had drawn resistance from export-reliant countries such as Japan. The G20 assumed the role of global economic leader following the financial crisis. The Group of Seven advanced nations faced criticism that it was too narrow a forum and failed to represent the voices of China and other fast-growing countries such as India. Regarding the IMF, the G20 called for greater representation for emerging countries on its executive board by reducing European seats by two and shifting more voting power to developing and under-represented countries.“It is a milestone in reforming global governance,” said Olli Rehn, economic and monetary affairs commissioner of the European Union, which also belongs to the G20.
