Korea must mediate hardWith only three days left before the G-20 Summit in Seoul, final preparations, along with the public’s support and positive cooperation for the historic event, are more than necessary. But for the historic meeting to succeed, we should first be able to achieve concrete results the world can share.
The first step to accomplish that goal is to do our best to get agreements on major agenda items at the summit, particularly on how to end the escalating war on exchange rates among member nations.
The meeting of G-20 finance ministers in Gyeongju, North Gyeongsang last month produced remarkable progress by reaching an agreement on moving toward market-determined exchange rates and maintaining sustainable current-account balances. With that agreement, the expectation grows that leaders of the G-20 nations will settle all rifts over exchange rates to prevent a catastrophic outcome for the world economy.
But the agreement in Gyeongju is only on a ministerial-level that sets the guidelines for their commanders-in-chief to put the final stamp on, requiring much more discussion and coordination this week.
Immediately after the earlier agreement, however, the U.S. government’s second quantitative easing emerged as a prime hurdle to a final agreement by the G-20 leaders. After the Federal Reserve Board decided to pour $600 billion into the economy, countries like China and Brazil lashed out at the measure as a massive release of the world’s reserve currency could only lower the dollar’s value, while drastically elevating the value of their own currencies, which again would lead to a further crisis and more exchange rate battles. If China and Brazil, two leading emerging economies, continue to blame the U.S. decision, it may make an agreement among G-20 leaders on exchange rates improbable.
Now the G-20 countries are briskly making last-ditch efforts for agreements on exchange rates. To induce an amicable agreement among G-20 countries, our role as the host country is very important because we have the indispensable job of mediating and coordinating all conflicting interests of member nations.
We believe that G-20 leaders should recognize that their debates on exchange rates are a fundamental basis for co-prosperity in the global economy, not for growth and more jobs in each individual economy. G-20 countries must make efforts to rejuvenate the spirit of cooperation displayed at the time of the global financial crisis that started in 2008.