Well-organised approach needed for currency crisis

Tuesday, November 9, 2010

Pretoria - South Africa hopes that the upcoming G20 Leaders Summit in Seoul, Korea, would pave the way for a well-coordinated global response to the problem of currency strength which is affecting emerging economies.

"Over the last number of weeks, there have been appeals that we should be careful as global players that we do not engage in competitive devaluation. We need to find a global solution to what is clearly a global problem," Gordhan told reporters ahead of the summit.

He believes that irrespective of a country's level of development, all countries need to pull together to address some of the challenges facing the global economy.

Gordhan's concerns have been echoed by Trade and Industry Minister Rob Davies, who also cautioned that quantitative easing could further drive up the value of developing country' currencies.

Davies said they would look to see what solutions came out of the G20 meeting, and South Africa would re-evaluate its options thereafter.

Gordhan said in the aftermath of the recession, the world had to move to a place where it could strike the balance between economic growth and development.

"We need to find the political will ... that will allow us to begin to engage in discussion regarding global sustainable growth," he said.

Another issue to be discussed at the two-day meeting is the reform of international financial institutions.
South Africa has been arguing for reform in terms better representation of developing countries.

"All we're saying is that Africa is under-represented in these fora. We need a new balance," said Gordhan.

The country also wanted the appointment of heads of these institutions to be done in a more transparent ways. It will also motivate for a third chair in the International Monetary Fund for sub-Saharan Africa.
Outstanding issues on how to deal with globally important banks and the supervision of rating agencies will also be up for discussion.

The G20 Leaders Summit comes hot on the heels of the June summit in Toronto, Canada. President Jacob Zuma will also be attending.