World finance officials pledge greater cooperation to deal with new threats to global economy
WASHINGTON (AP) — World financial officials are promising increased cooperation in dealing with threats to the global economic recovery such as rising oil prices.
The policy-setting committee of the 187-nation International Monetary Fund says the economy is rebounding from the recession and gaining strength, but is still vulnerable.
The group is pledging to coordinate economic efforts to keep the recovery on track and address challenges such as rising inflationary pressures in China and other emerging markets.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.
The world’s financial powers have agreed on a new way to track economic health in hopes of short-circuiting the kinds of problems that caused the worst global downturn since World War II.
Officials from the U.S. and other members of the Group of 20 major economies said the monitoring will closely follow indicators such as governments’ budget and trade deficits, personal savings levels and investment flows between nations.
The intent is to spotlight troubles before they grow so large that they threaten global growth.
Despite the deal announced Friday, it’s not clear how effective the new system will be.
Talk of financial change spilled over into Saturday at the meetings of the policy-setting committees of the 187-nation International Monetary Fund and the World Bank.
Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke represented the United States.
Geithner had a series of meetings with officials from Portugal and Greece, which have serious debt troubles, and from the European Union and Germany, both involved in trying to deal with Europe’s debt woes.
Geithner said at the IMF meeting that the U.S. would work to tackle its deficit, one of the chief imbalances the new monitoring system hopes to control.
“The United States will do its part to address our external deficit and repair our public finances,” Geithner said. He also said countries such as China that tightly manage their currencies should move toward more flexible systems and “allow their exchange rates to adjust in response to market forces.”
After the daylong G-20 talks ended Friday, French Finance Minister Christine Lagarde told reporters that the monitoring agreement was a significant achievement in efforts to restore confidence and prevent future financial crises.
Lagarde said all G-20 nations will take part, but the focus at the start would be on seven of the world’s largest economies. She declined to name all of those countries but the group is expected to include the U.S., China, Japan, Germany, France, Britain and India.
What about the process remains unknown, including whether countries found to have dangerous imbalances will be identified publicly. China in the past has blocked public release of criticism it has received from the International Monetary Fund.
The initial monitoring effort will be reviewed at an October meeting of the G-20 finance officials. Because there is no enforcement mechanism, it’s unclear what pressure can be brought to bear from the monitoring.
Associated Press writer Desmond Butler contributed to this report.
Source: Associated Press
