World Bank Official Encourage Coordination Among G20 Countries

World Bank Official Encourage Coordination Among G20 Countries

The chief economist of the World Bank encouraged better coordination among the finance leaders of the Group of 20 to avoid a currency war. Kaushik Basu, indicated that the upcoming meeting of the finance ministers should be the venue for the talks before another international financial crisis will happen.

Although the measures adopted by countries will minimize a decline in the global economy, growth will not be as fast as it should be.

The new chief economist of the World Bank indicated that the new monetary policies implemented by the central banks of Europe, Japan, and the United States are starting to affect the situation in the international market. Countries have become more competitive following the weakening of their currencies due to the increase in printed money and debt.

The situation was aggravated with the increasing flow of money in emerging markets that offered higher interest rates, which resulted to an increase in the value of their currency.

Statements by Japanese officials have also made some European and US officials anxious since the Asian country was reportedly aiming for a certain level for its currency. The yen has devalued by around twenty percent against the US dollar since last October.

The World Bank economist indicated that an agreement should be made in connection to the policies to allow the central banks of the different countries to support each other.

Basu added that there are movements in the international market although this is not yet noticeable. In around four years, a number of emerging economies will become the main source of growth around the world. Although Brazil, India, China, and Indonesia are currently the best emerging economies for the moment, economic reforms implemented by African countries have increased their appeal to investors, the World Bank chief economist indicated.

Sooner or later, the industrialized countries will become the main drivers of economic growth and emerging economies will settle back to around nine percent growth, which is the level that they had prior to the global economic crisis, the chief economist of the World Bank revealed.

Posted by James Fried on Wednesday February 13 2013, 3:41 AM EST. Ref: Reuters. Link. All trademarks acknowledged. Filed under Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0