Criticism of G20 crisis management

Dominique Strauss-Kahn, the managing director of the IMF, said that the Group of 20 big economies had failed to coordinate global action to boost the economy and rebuild shattered banks. In spite of G20 leaders pledges in Washington in November, according to Strauss-Kahn “very little has been done and time is running out”.

Robert Zoellick, the president of the World Bank, bemoaned that, instead of safeguarding free trade as promised in November, some G20 members had taken protectionist steps, admitting that those steps remained small. “We have to keep watching,” he said.

Zoellick also told London’s Financial Times that bailouts and stimulus packages in rich nations were understandable, but nonetheless diverted capital from emerging markets. According to the Institute of International Finance, an umbrella organisation of financial institutions from around the world, private-sector capital flows to developing countries will drop to $ 165 billion this year, roughly one third of last year’s volume.

Tackling the controversial issue of China’s exchange-rate policy, Strauss-Kahn said that the issue was not so much one of blaming the leadership in Beijing, but rather to convince them of having to move. The IMF has repeatedly stated that the renminbi is undervalued.

Tim Geithner, the new US treasury secretary, had caused disgruntlement in Beijing by submitting to the US Senate that the Chinese currency’s exchange rate was “manipulated” (also note interview on Chinese policy on page 84).
Hans Dembowski