G-20 ministers make currency pledge

Finance minister from the G-20 group of countries on Saturday pledged not to weaken currencies in order to gain export advantages against each other.

The finance ministers issued that statement after wrapping up a two-day meeting in Moscow, where Russia presided. 

{mosads}The financial community has been rocked in recent weeks by a statement from Japan that it would consider a weaker yen in order to promote growth. The G-20 has also been struggling to deal with China’s undervalued currency, which boosts its exports and restrains imports, including from the United States.

“We will refrain from competitive devaluation. We will not target our exchange rates for competitive purposes, will resist all forms of protectionism and keep our markets open,” the G-20 statement reads.

Addressing the China issue more closely, they said: “We reiterate our commitments to move more rapidly toward more market-determined exchange rate systems and exchange rate flexibility to reflect underlying fundamentals, and avoid persistent exchange rate misalignments and in this regard, work more closely with one another so we can grow together.”

Japan and China were not called out specifically.

Treasury Undersecretary Lael Brainard represented the United States at the meeting as Jack Lew has not yet been confirmed as the new Treasury Secretary following the departure of Timothy Geithner. 

The G-20 statement is less resounding on other issues of concern to the U.S. and Congress. It does not call strongly for reigning in public debt and it does not offer much in the way of specifics for restraining mulinational corporate tax avoidance. 

“In the tax area, we welcome the OECD [Organisation for Economic Co-operation and Development] report on addressing base erosion and profit shifting and acknowledge that an important part of fiscal sustainability is securing our revenue bases,” the communique states. 

On debt, it calls for more study.

“In pursuit of our goal of strengthening the public sector balance sheet, work is needed to better assess risks to public debt sustainability. This includes, inter alia, taking into account country-specific circumstances, looking at transparency and comparability of public sector reporting, and monitoring the impact of financial sector vulnerabilities on public debt,”  the document states.

President Obama will travel to Russia in September to attend the G-20 leaders meeting hosted by Russian President Vladimir Putin.