Canada sees G7, G20 addressing yuan, imbalances

Wed Dec 23, 2009 9:55am EST
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By Randall Palmer

OTTAWA (Reuters) - G7 and G20 meetings next year will put a major focus on fixed-rate currencies like the Chinese yuan to try to address global economic imbalances, Canadian Finance Minister Jim Flaherty told Reuters.

Speaking in an interview on Monday, Flaherty said the Canadian dollar and other market currencies could keep rising. The interview was held for release on Tuesday.

Flaherty, who will chair talks by finance ministers and central bankers of the Group of Seven rich industrialized nations in Canada in February, said a meeting of finance officials from the broader Group of 20 rich and emerging market economies would take place in June in South Korea.

The Canadian meeting, in the Arctic town of Iqaluit, would not issue a communique, reflecting the increasing weight now being placed on the G20 in the international community.

"This is an opportunity for G7 countries to deal with some of the financial sector reform issues, for example, because the financial crisis did emanate from the G7," he said.

He said the question of currencies was crucial because of the global imbalances -- principally huge current account surpluses in countries like China and deficits in the United States and elsewhere.

"You can't look at the world today on a macro basis and not ask the question: Is this a source of instability?" he said.

"So China, for example, was permitting its currency to move more toward the market before the crisis. I hope as the crisis eases that we'll see a resumption of that pattern."   Continued...