G-20 Must Avoid Devaluation ‘Spiral,’ EU’s Rehn Says

G-20 Must Avoid Devaluation ‘Spiral,’ EU’s Rehn Says
European Union's Economic And Monetary Affairs Commissioner Olli Rehn. Photographer: Jock Fistick/Bloomberg

Group of 20 nations must avoid a downward “spiral” of competitive devaluations of their currencies, said Olli Rehn, European Union Economic and Monetary Affairs Commissioner.

“The main issue of this G-20 is to agree on a policy on the coordination and rebalancing of global growth,” Rehn said today in Gyeongju, South Korea. “We’re at a critical juncture where there is a danger of non-cooperative action that risks derailing global growth. We need effective policy coordination, not unilateral action.”

Didier Reynders, Belgium’s finance minister, said the G-20 needs a balanced solution to exchange rates.

“That means that exchange rates that are in line with the different positions of the world’s economies, it means strong currencies in strong economies, not weak currencies in strong economies,” Reynders said in Gyeongju, where finance ministers and central bankers are meeting. “Balanced currencies should reflect the situation of global growth.”

Rehn said exchange rates are a major issue in the rebalancing of global growth.

“What we can agree is to avoid a spiral of competitive devaluation,” he said.

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