G20: Profound And Complete Disappointment “1. There was no substantive progress on anything to do with exchange rates. The “indicative guidelines” to be agreed next year are just a way to kick the can down the road. The Chinese are digging in hard on their exchange rate; this is headed towards a mutually destructive trade war.
2. There was less disagreement at the summit regarding the ”regulation” of global megabanks – but only because this had been gutted so effectively by the bankers’ lobby and officials who bought their specious arguments. There is nothing here that will prevent or limit the impact of another major worldwide financial crisis.
3. On IMF governance, over which there was substantial fanfare in advance, it turns out there has been a major step backwards. The Europeans have apparently signaled they are no longer willing to give up the job of Managing Director – they have always controlled this job and this is a major reason why IMF legitimacy remains weak. Unless and until an emerging market person gets this position, no one (outside of Europe) will want to rely on the IMF in an emergency. As a result all countries will want to “manage” their exchange rates – to the extent they can – along Chinese lines, aiming for a significant current account surplus (so as to build up foreign exchange reserves). See point #1 above for the likely consequences of that.” http://baselinescenario.com/2010/11/13/g20-profound-and-complete-disappointment-for-the-us-treasury
The G20 Seoul Summit Leaders’ Declaration November 11 – 12, 2010: