OTTAWA: Finance ministers and central bankers from the top 20 economies of the world on Sunday ended two days of talks in Buenos Aires. They began against a backdrop of concern with a burgeoning trade war that had risked spilling into currency markets. The meeting kicked off under the shadow of US President Donald Trump’s threats to slap more levies on Chinese imports, accuse the EU and China of manipulating their currencies, and criticizing the Fed of raising interest rates.
Here are some of the highlights from the two-day summit.
Treasury Secretary Steven Mnuchin addressed Trump’s comments on the eve of the summit that a stronger dollar and rising US interest rates were undermining America’s competitive advantage.
Speaking to reporters Saturday morning before the start of talks, Mnuchin said Trump fully supports Federal Reserve independence and isn’t trying to interfere in foreign-exchange markets.
“This is not in any way the president trying to intervene in the currency markets whatsoever,” said Mnuchin, who also reiterated the traditional strong-dollar policy mantra.
IMF chief Cristine Lagarde weighed in, saying central bank “independence is key”.
“Central bank independence is absolutely sacrosanct in my view and there is ample evidence that independent central banks tend to be more successful,” South African Reserve Bank Deputy Governor Daniel Mminele.
Global growth threatened
Global growth continues strong but is less synchronized and faces more risk than before, including that from trade tensions, the G-20 said in its final statement. Emerging markets particularly faced risks of capital outflows and market volatility.
“The impact of protectionist measures already implemented has been — that’s lucky– so far very limited. But the risk of escalation is there,” said European Union Economic Affairs Commissioner Pierre Moscovici.
Law of the Jungle
France’s Finance Minister Bruno Le Maire said the US needed to “return to reason” and likened “its unilateral trade actions to “the law of the jungle.”
The US must rescind its tariffs on steel and aluminium imports before European countries discuss overhauling aspects of global trade, he said. “We refuse to negotiate with a gun to the head.”
Despite some of the fiery rhetoric surrounding the summit, drafting the final statement went smoother than it has in a long time, according to several people who participated. The host, Argentina, said the consensus was easily reached on Saturday, a day ahead of schedule. Mnuchin himself said it was his easiest communique.
Policymakers are still working towards a unified strategy to oversee digital currencies, which have soared in popularity and pose a challenge to regulators who are concerned about their volatility and potential use in money laundering and tax evasion.
The G-20 statement reiterated cryptos lack many of the attributes of sovereign currencies, but delegates provided limited details on any specific and coordinated steps member nations might take to regulate the assets.