G-20 Pledges to Refrain from Currency Wars
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The G-20 a collection of the worlds most prominent finance ministers held a two day meeting in Korea. During this meeting the various challenges currently facing the global economy were discussed. The main issue of currency trading was at the forefront of discussion.
2. How is the article relevant to this class (please list the chapter reference as well)?
This article was extremely relevant to the most recent chapters discussed in class. The relevance to 3 chapters was undeniable. The types of isms being practiced by the financial ministers of the world was Capitalism. Also in chapter 3 “The Economic Role of Government” from the US perspective which is to maintain our competitive system and ensure the relatively unregulated operations of the law of supply and demand. Specifically the US concern about China allowing their currencies to traded at artificially lower levels.
The laws of supply and demand from chapter 4 were addressed when US Treasure Secretary Timothy Geithner urged the G-20 to take a strong action to make sure emerging market nations allow their currency to appreciate in line with the free market. If a basic supply demand curve were drawn Geithner is asking the G-20 to place a price ceiling on the currency trade levels of other nations so there is no shortage which would cause global inflation to rise. The production possibility curve was addressed when the gross domestic product for the 3rd quarter in China rose at an annual rate of 9.6%.
3. List the most important facts/evidence that the author uses to support the main idea:
The G-20 would look closely at the currency trade system and modify if necessary. However they did not outright state they would ban currency manipulation. The global economy is growing but not in a secure and steady way. Also the pace of growth in advanced economies such as the US and Japan is at the least showing modest growth.
Finally the increased magnetism of emerging markets such as China, Brazil, India and Russia would receive more seats on the board of the International Monetary Fund. These younger markets would have a larger presence and possible say when it comes to the global economy.