G20 coordinated criteria to avoid economic crisis

Almaty. February 21. Kazakhstan Today - The G20 coordinated indicators to detect economic imbalances, Kazakhstan Today reports.

The world's dominant economies took a small step Saturday toward smoothing out global trade and currency imbalances at the root of the global financial crisis, overcoming Chinese objections and setting the stage for even tougher negotiations in the months ahead, The Washington Post reported.

The G20 have reached a deal on indicators to detect economic imbalances, the French presidency said, after the meeting ended in Paris, BBC News reported.

The deal was agreed after softening criteria on current account surpluses to get China on board, reports suggest.

The aim is to co-ordinate policies more to avoid another economic crisis.

Ms Lagarde said there had been lengthy discussion on the indicators to be used, after reports that China, sensitive over its currency policy, had resisted the inclusion of some economic indicators.

China was said to be opposed to including the current account - which measures cash going in and out of the country as a result of trade and other activities - in the list of indicators.

Under the compromise, the current account will be on the list, but the measure will be adjusted to exclude the interest payments that China receives on its multi-trillion dollars-worth of foreign currency reserves, an official told AP news agency.

The indicators also include public debts and deficits and private debt levels and savings rates.

Beijing has been accused by trading partners - particularly the US - of accumulating trillions of dollars of currency reserves in a bid to hold down the value of the yuan and give Chinese exporters an unfair trading advantage.

Some economists say that China and other "mercantilist" countries contributed to the 2008 financial crisis by accumulating excessive foreign currency reserves, especially US dollars.

Many Asian countries began building up their reserves in the wake of a crisis in 1997 that saw many of them forced to painfully devalue their currency.

Ms Lagarde said the indicators were not binding targets but would lead to the drafting of guidelines for co-ordinated economic policies.

It is unclear what will happen if a country is in breach of the guidelines, beyond peer pressure from other G20 members.

The two-day meeting in Paris also agreed other important steps:

clear language on implementing deficit reduction

implementation of bonus restrictions on the financial sector, with a report in mid-2011 on how far countries have got

a commitment not to implement any protectionist measures, which was seen as particularly important in light of rising commodity prices.

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