Finance, Forex and Investments

Korea was a key mediator

Summary: NEWS ANALYSIS President Lee ordered officials in September to come up with proposals to save the G 20 Korea played an instrumental role in persuading the G 20 nations to reach a breakthrough agreement on curbing competitive currency devaluations and possibly saving the G 20 Summit in Seoul next month from collapse according to officials yesterday A senior official at the Presidential Committee for the G 20 Summit said the government had been concerned that the exchange rate controversy would overshadow other issues at the Nov 11 12 G 20 Summit such as a global financial safety net As a result Korea felt the need to come up with solutions to the problem We were worried that the G 20 Summit next month will be dominated by this the exchange rate issue when we had put much preparation into other agenda items such as the global financial safety net IMF quota reforms and development issues among emerging nations the official said According to the official President Lee Myung bak ordered Korean negotiators in early September to devise ways to resolve the currency dispute and they had proposed linking the currency issue to other problems causing the global economic imbalance The G 20 official said the results announced in the joint communique amounted to a dramatic agreement His comments suggested that China had made a compromise on agreeing to the idea of a market based exchange rate system in return for the U S and Europe approving giving more voting rights at the International Monetary Fund to China and other developing nations Korean officials said last week that such a trade in concessions was in the works Korea as the host successfully proposed alternatives the G 20 official said speaking on the condition of anonymity Now nobody will think of Korea as a figurehead host Because there were major agreements in Gyeongju there is going to be more progress at the Seoul Summit Lael Brainard the U S Treasury undersecretary for international affairs said that Korea had played a pivotal role in the G 20 meeting according to the G 20 official The Korean Finance Ministry and the G 20 Organizing Committee are now preparing detailed guidelines for the G 20 Summit based on the agreements reached by the G 20 finance ministers and central bank governors at their weekend meeting in Gyeongju North Gyeongsang The next step likely to be undertaken by the Korean government will be drawing up specific proposals to manage excessive trade surpluses or deficits that threaten to create imbalances in the global economy At the prompting of Korea the U S had suggested limiting trade surpluses and deficits to 4 percent of a nation s gross domestic product That proposal for a specific target failed to gain agreement at the weekend meeting although the concept of limiting current account imbalances was accepted in principle Everyone agrees that the current account needs to be maintained at a stable level Yoon Jeung hyun the finance minister told the press There needs to be some sort of an index for the world to cooperate and seek stable growth He said there will be further discussions on the issue at the Seoul Summit A second key breakthrough at the Gyeongju meeting was the decision to transfer more than 6 percent of the IMF quota from advanced economies to developing ones Although the issue had been expected to be contentious it apparently went smoothly with EU nations losing two seats on the IMF executive board As a result of the agreement China will become the third biggest shareholder with Brazil Russia and India also being among the top 10 IMF shareholders The U S quota is expected to decline from 17 percent to 16 percent Korea s rank in terms of the IMF quota is expected to rise from 18th to 16th The IMF will assume a special role monitoring progress on the commitments reached at the Gyeongju meeting and will publish a semiannual report on agreed objectives on exchange rates capital accounts and structural and fiscal policies This plan is meant to overcome doubts about whether the G 20 will follow the agreements that were reached at the weekend Basically agreements at G 20 meetings are not binding the G 20 official said But considering the peer pressure from G 20 members and with their international reputations on the line the members are likely to voluntarily implement the agreements By Limb Jae un Ser Myo ja jbiz91 joongang co kr Copyrights ⓒ JoongangIlbo Jcube Interactive Inc All rights reserved NEWS ANALYSIS President Lee ordered officials in September to come up with proposals to save the G 20 Korea played an instrumental role in persuading the G 20 nations to reach a breakthrough agreement on curbing competitive currency devaluations and possibly saving the G 20 Summit in Seoul next month from collapse according to officials yesterday A senior official at the Presidential Committee for the G 20 Summit said the government had been concerned that the exchange rate controversy would overshadow other issues at the Nov 11 12 G 20 Summit such as a global financial safety net As a result Korea felt the need to come up with solutions to the problem We were worried that the G 20 Summit next month will be dominated by this the exchange rate issue when we had put much preparation into other agenda items such as the global financial safety net IMF quota reforms and development issues among emerging nations the official said According to the official President Lee Myung bak ordered Korean negotiators in early September to devise ways to resolve the currency dispute and they had proposed linking the currency issue to other problems causing the global economic imbalance The G 20 official said the results announced in the joint communique amounted to a dramatic agreement His comments suggested that China had made a compromise on agreeing to the idea of a market based exchange rate system in return for the U S and Europe approving giving more voting rights at the International Monetary Fund to China and other developing nations Korean officials said last week that such a trade in concessions was in the works Korea as the host successfully proposed alternatives the G 20 official said speaking on the condition of anonymity Now nobody will think of Korea as a figurehead host Because there were major agreements in Gyeongju there is going to be more progress at the Seoul Summit Lael Brainard the U S Treasury undersecretary for international affairs said that Korea had played a pivotal role in the G 20 meeting according to the G 20 official The Korean Finance Ministry and the G 20 Organizing Committee are now preparing detailed guidelines for the G 20 Summit based on the agreements reached by the G 20 finance ministers and central bank governors at their weekend meeting in Gyeongju North Gyeongsang The next step likely to be undertaken by the Korean government will be drawing up specific proposals to manage excessive trade surpluses or deficits that threaten to create imbalances in the global economy At the prompting of Korea the U S had suggested limiting trade surpluses and deficits to 4 percent of a nation s gross domestic product That proposal for a specific target failed to gain agreement at the weekend meeting although the concept of limiting current account imbalances was accepted in principle Everyone agrees that the current account needs to be maintained at a stable level Yoon Jeung hyun the finance minister told the press There needs to be some sort of an index for the world to cooperate and seek stable growth He said there will be further discussions on the issue at the Seoul Summit A second key breakthrough at the Gyeongju meeting was the decision to transfer more than 6 percent of the IMF quota from advanced economies to developing ones Although the issue had been expected to be contentious it apparently went smoothly with EU nations losing two seats on the IMF executive board As a result of the agreement China will become the third biggest shareholder with Brazil Russia and India also being among the top 10 IMF shareholders The U S quota is expected to decline from 17 percent to 16 percent Korea s rank in terms of the IMF quota is expected to rise from 18th to 16th The IMF will assume a special role monitoring progress on the commitments reached at the Gyeongju meeting and will publish a semiannual report on agreed objectives on exchange rates capital accounts and structural and fiscal policies This plan is meant to overcome doubts about whether the G 20 will follow the agreements that were reached at the weekend Basically agreements at G 20 meetings are not binding the G 20 official said But considering the peer pressure from G 20 members and with their international reputations on the line the members are likely to voluntarily implement the agreements By Limb Jae un Ser Myo ja jbiz91 joongang co kr Copyrights ⓒ JoongangIlbo Jcube Interactive Inc All rights reserved

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