| CANNES, France
CANNES, France Nov 4 Group of 20 nations have
agreed to move "more rapidly" towards flexible exchange rates in
a draft action plan for growth that adopts stronger language on
currency rates than previous statements by the club of leading
The draft, which went to G20 leaders for final approval at a
summit on Friday, also mentions China by name for the first time
in the context of greater currency flexibility.
Beijing has long faced pressure from western nations to
allow its yuan currency to float more freely but has refused to
bow to those demands.
"We affirm our commitment to move more rapidly towards
market determined exchange rate systems and enhance exchange
rate flexibility to reflect underlying fundamentals and refrain
from competitive devaluation of currencies," said the draft, a
copy of which was obtained by Reuters.
It welcomed China's determination to increase exchange rate
flexibility "consistent with underlying market fundamentals" as
well as recent changes to Russia's currency regime.
G20 officials from emerging economies said the language on
currencies could well be diluted in the final version of the
It will be the first time that the G20 has published an
"action plan" with specific national commitments to boost growth
and rebalance the global economy, a drive that started at the
height of the global financial crisis.
The plan also included a six-point list of measures for
strengthening medium-term growth and detailed steps that
individual G20 countries pledge to undertake.
The United States, for example, committed in the draft to
put its debt-to-GDP ratio on a declining path no later than the
middle of the decade.
Emerging market economies and Germany promised to implement
measures to boost domestic demand-led growth.
French President Nicolas Sarkozy, who faces a tough
re-election campaign in 2012, had hoped to use his G20
presidency to pursue an ambitious rethink of the global monetary
But he has had to rein in his ambitions as the euro zone's
debt crisis has blown up, threatening to plunge the global
economy back into recession.
The European Central Bank cut interest rates on Thursday
for the first time in over two years, saying the 17-nation
currency bloc could suffer a "mild recession" in the latter part
of the year. A day earlier the U.S. Federal Reserve slashed its
forecasts for growth in the world's largest economy.
"In emerging markets, there are also clear signs of a
slowing in growth as developments in advanced economies begin to
weigh on these countries," the draft said.
"In some emerging market economies, financial stability and
overheating risks remain," it added. "The lack of exchange rate
flexibility in some countries limits policy options to deal with
The G20 also reprised its usual line on currency volatility,
saying that "disorderly movements in exchange rates have adverse
implications for economic and financial stability".
In their final communique, G20 leaders were also expected to
call for a bolstering of the Financial Stability Board, a task
force set up at the height of the global financial crisis to
look at global financial regulations.