EU to Press China at G-20 Summit for Pledge to Let Yuan Rise
The EU also will seek a pledge from the U.S. to rein in its budget deficits, as well as support for European efforts to address the sovereign-debt crisis. Next week’s summit will include country-by-country commitments as well as statements from the full G-20, the officials told reporters today in Brussels.
European leaders will acknowledge the spillover effects from the euro-area debt crisis, which has worsened since the G-20 gathered last year in Seoul. Still, Europe is not the only area with problems and its concerns should not overshadow the responsibilities borne by other nations, the officials said.
The G-20 is designing a system to spot imbalances in trade and investment flows in an effort to help the world economy prosper and avoid future crises. In April, finance ministers agreed on indicators for measuring these imbalances, to lay the groundwork for how they will be monitored and enforced.
“The guidelines operate like a net which holds the countries which violate or do not respect” the benchmarks, Christine Lagarde said in April, when she was French finance minister and had not yet taken up her current post as head of the International Monetary Fund. Seven countries -- the U.S., China, Germany, France, the U.K., India and Japan -- were deemed large enough to be of systemic importance and will face tougher scrutiny.
The EU will push for strong language from the G-20 on how the new framework will work, the officials said today. Europe is seeking the guidelines to have enough strength to be effective, without going as far as proposing sanctions or other measures that might alienate some countries.
Financial regulatory measures also will be part of next week’s G-20 discussions. The EU sees itself as a success story in implementing the Basel II capital accords and also will continue discussions about global oversight of derivative markets and systemically important financial institutions.
The European Commission, the EU’s executive arm, will discuss its proposals for a financial-transactions tax. There is not yet strong support for a global tax, so next week’s discussions will serve as a way to keep the topic in focus for future years, the officials said.
The G-20 is scheduled to hear a presentation on development from Bill Gates, chairman of Microsoft Corp. and co-chairman of the Bill and Melinda Gates Foundation, that may also endorse the transaction tax idea, one of the EU officials said. Such taxes have generally drawn support from non-governmental organizations like Oxfam that see the tax as a way to raise money to fight poverty.
The EU will press the full G-20 to pledge to ensure that the IMF will have sufficient resources to meet its commitments. The EU also will seek to discuss global management of raw materials, in hopes of finding common ground between consumers and producers of specialty minerals.
European leaders won’t use the summit as a forum to seek contributions to the European Financial Stability Facility, the euro area’s main rescue fund, or other debt-crisis rescue initiatives, the officials said.
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