World's major economies split on monetary policy

PanARMENIAN.Net - The world's major economies were split down the middle on Feb 18 over how to measure imbalances in the global economy in a bid to avert future financial crises, Japan's finance minister said.

Speaking hours before the start of a meeting of G20 finance ministers and central bankers, Yoshihiko Noda said he was not sure they would reach any agreement on a set of indicators to assess economic equilibrium.

"It is uncertain whether the countries will agree on all indicators, but I think agreement on some is possible," Noda told reporters. "From working group discussions, I get the impression countries are now split in half about their opinions."

In preparatory talks on Feb 17, G20 sources said China and Germany dragged their feet over a balance of payments indicator while Beijing was resisting including measurements of the real foreign exchange rate and currency reserves in the package.

France has run into opposition with its push for greater transparency and regulation of commodities prices and a reform of the international monetary system and is pinning its hopes on measuring imbalances in the world economy, where the G20 nations account for around 85 percent of GDP.

The world's top central bankers were expected to discuss commodity price inflation and how to handle the divergence between booming emerging market economies and sluggish growth in most developed economies in a public debate.

In a paper prepared for the two-day G20 meeting, the International Monetary Fund said euro zone debt tensions still posed a threat to global recovery, while fast-growing emerging nations risked overheating and surging food prices posed an inflationary risk, Reuters reported.