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G20 Seoul Summit to settle exchange rate debate: S Korean official

11-11-2010 11:19 BJT

by Na, Haejung

SEOUL, Nov. 8 (Xinhua) -- Leaders of the G20 countries will be able to reach an agreement over the exchange rate issue at the upcoming G20 Seoul Summit, head of the organizing committee said Monday.

"Although there can be a fierce debate as we go through discussions, we will eventually reach an agreement (over the exchange rate issue) to some degree," Sakong Il, chairman of the Presidential Committee for the G20 Summit, said in an interview with Chinese correspondents.

According to Sakong, the exchange rate issue will be tabled at the Seoul Summit, as part of the global economy session, but in a broader sense, it will be incorporated to the trade balance issue.

"We, South Korea, proposed to shift focus to current account balance from currency as it is just one part of policy measures," said Sakong.

Accordingly, substantial progress was made at the G20 Finance Ministers' meeting in Gyeongju, Sakong added, agreeing on the so-called "indicative guidelines" to evaluate whether the current account balance is sustainable or not.

However, for the Seoul Summit, there still remains the issue of how to elaborate the guideline, whether to specify it in definite quantitative figures or to picture it in a comprehensive framework.

The chairman also commented on the additional quantitative easing (QE2) plan recently announced by the U.S. Federal Reserve, expressing his hope it will not hamper the progress of ongoing debates over currency, trade, and current account balance.

When asked by a Xinhua correspondent on whether the QE2 could trigger a new round of currency war, Sakong said the issue will also be dealt with at the discussion table, as part of the mutual assessment process (MAP).

"In fact, it is important that we have the G20 system because we have the process to discuss the issue within the MAP. If there weren't such a process, there would just be a fierce debate, possibly leading to a breakup," Sakong explained, stressing such things won't actually happen at the Seoul Summit.

Sakong also highlighted development and global financial safety net (GFSN), issues newly brought up for the Seoul Summit by South Korea.

The two agenda items, separately categorized as the Korea Initiatives, take up around 30 to 40 percent of the agenda, said Sakong, which South Korea pushed ahead with for the sake of emerging economies and developing countries.

"Dealing with the issue, the G20 could contribute to a balanced growth of the global economy, while lending support to its own legitimacy and credibility," Sakong told reporters.

Sakong also noted that the GFSN is a key issue to emerging economies, saying emerging countries and mid- or small-sized open economies can be exposed to great influence from overseas capital flows without a safety net.

"By changing a couple of the IMF's credit lines, we have completed the 1st-step measures, and there still remains a follow- up task to complete 2nd-step measures at the Seoul Summit," Sakong said, confirming the issue will continue as a major agenda item for the following G20 summits, including the Paris Summit next year.

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