Currency – a new policy tool? by Barbora Misakova

In such difficult times like these, there is no surprise people are doing what they can to make money. Economy crisis hit us all and not very kindly, so efforts to start old business up again are more than understandable. The question is: where are the limits? Timothy Geithner, U.S. Treasury Secretary, has been pointing out the risk of a round of destructive competitive currency devaluations. Semi-annual meetings of the International Monetary Fund and World Bank which will take place this weekend, in all probability will be also trying to solve this problem as it is serious and it has global importance. As Geithner pointed, global institutions have to make coordinated push ! to persuade as big countries as China to let their currencies’ vale rise. If they don’t do that, it will endanger the global economy as a whole. “This is a problem because when large economies with undervalued exchange rates act to keep the currency from appreciating, that encourages other countries to do the same.” he said at the Brookings Institution. According to him, Obama administration has ample backing for its efforts to get Beijing to move toward market-oriented exchange rates, even though he was not that optimistic about its speed. “China will be less likely to move to allow its currency to rise more rapidly if it is not confident other countries will move with it.” Geithner said. As America is slowly bringing on its feet again, other countries overly reliant on exports try to abuse it. But as Geithner said: “Countries overly reliant on exports to us for their own growth will need to change their policies, or else global gr! owth will slow and all of us will be worse off.”
related story (sgx18348): http://news.yahoo.com/s/nm/20101006/bs_nm/us_currencies_geit...

by Barbora Misakova for Cantell TV (http://cantell.tv)

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