At the upcoming G20 meeting the participating countries will show their commitment to avoid currency weakening to boost their exports and gain a trade advantage. They will make a pledge to “move more rapidly toward more market- determined exchange rate systems and exchange-rate flexibility” and to refrain from competitive devaluations. Meetings of finance ministers and central bankers start today. Nevertheless a direct criticism of Japan and its quantitative easing program which was responsible for 19% devaluation of the yen against the dollar will be withheld. The campaign of the Japanese Minister Shinzo Abe to end the deflation in the country always carries a risk of being criticized by the country’s trading partners. Despite that the Japanese Prime Minister efforts have been successful so far, though there is still a lot of thing to be done.
The following G20 talks will be the first since Japan has introduced its unprecedented 75 billion dollar per year bond buying program, whose aim is to double the monetary basis of the country in the next two years. The yen has dropped about 5 percent against the U.S. dollar since the day before the BOJ announcement, the biggest slide among 16 major currencies and more than three times as fast as the drop in the Australian dollar, the second-worst performer.
On financial regulation, the draft text calls for further steps by G-20 members to introduce resolution regimes for winding down faltering “too-big-to-fail” banks without triggering fiscal instability or taxpayer-financed bailouts. In addition to that Europe will be urged to move more quickly towards introduction of a banking union
Current G-20 members include all of the following countries Argentina, Australia, Brazil, Canada, China, the European Union, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the U.K. and the U.S.