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UPDATE 1-G20 summit to focus on euro zone debt crisis - EU
October 10, 2011 / 11:56 AM / 6 years ago

UPDATE 1-G20 summit to focus on euro zone debt crisis - EU

BRUSSELS, Oct 10 (Reuters) - Leaders from the G20 countries are so concerned that Europe’s crisis will spillover to the rest of the world it is likely to be the focus of their summit in early November, top European Union officials said in a letter on Monday.

European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy said in a letter to other EU leaders, however, that the Nov. 3-4 summit in Cannes, France, should also discuss risks to global growth from the United States and emerging economies.

“Europe will be in the focus of the Cannes summit,” the letter from Barroso and Van Rompuy said.

“Our G20 partners’ perception is that if Europe does not solve its sovereign debt crisis there will be dangerous spillovers on the global economy. We need to show them that the European Union is determined to do whatever necessary to overcome the current difficulties,” the two EU leaders said.

The G20 comprises the worlds leading developed and developing countries.

The letter said that many of the economic imbalances that existed before the euro zone debt crisis were still there. They have often complained about China’s undervalued yuan currency and a lack of savings in the United States.

“We therefore need to ensure a balanced discussion of the various risks to the global economy, including those coming from the U.S. and from emerging market economies. All countries need to make a contribution,” the letter said.

It reiterated a call from EU finance ministers for a road map to expand the basket of currencies that underpin the International Monetary Fund’s artificial currency called the Special Drawing Right (SDR).

Some policymakers hope the SDR could become the world’s new reserve unit, reducing international reliance on the U.S. dollar.

If the SDR currency basket were to include the Chinese yuan, policymakers hope Beijing could be more interested in allowing the now tightly controlled currency to appreciate, which, in turn, would help rebalance global trade and savings patterns.

The EU would also like to discuss at the G20 summit the possibility of giving the IMF more and better tools to deal with countries under systemic stress and whether the fund has enough money for such interventions.

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