SEOUL (Reuters) - Following is a text of a letter from President Barack Obama to G20 leaders due to meet in Seoul from Thursday.
The letter was sent on Tuesday.
“As we approach the Seoul Summit, the world is looking to us to work together to strengthen the global economic recovery, continue to repair the financial system, and promote the stability of global markets.
“The United States will do its part to restore strong growth, reduce economic imbalances, and calm markets. A strong recovery that creates jobs, income and spending is the most important contribution the United States can make to the global recovery.
“The dollar’s strength ultimately rests on the fundamental strength of the U.S. economy. To secure the strong recovery the global economy needs, the United states joined with its G-20 partners to take decisive action to halt the fall in activity caused by the deepest crisis we have experienced in generations.
“The United States moved quickly to repair our financial system and to enact the strongest financial reforms since the 1930s.
“The United States is committed to an ambitious path of fiscal consolidation, consistent with our G-20 commitment to stabilize our public sector debt, as the recovery strengthens.
“We all now recognize that the foundation for a strong and durable recovery will not materialize if American households stop saving and go back to spending based on borrowing. Yet no one country can achieve our joint objective of a strong, sustainable, and balanced recovery on its own.
“Just as the United States much change, so to must those economies that have previously relied on exports to offset weaknesses in their own demand. A rebalancing of the sources of global demand, along with market determination of exchange rates that reverses significant undervaluation, are the best base for the shifts needed to bring about the vigorous and well-balanced recovery that we all want.
“When all nations do their part — emerging no less than advanced, surplus no less than deficit — we all benefit from higher growth.
“The action plan that our G-20 Finance Ministers and Central Bank Governors laid out in Gyeongju offers a new consensus on global economic cooperation. It sets out how unleashing domestic demand in surplus countries can support strong global growth as deficit countries increase savings and repair balance sheets damaged by the crisis.
“It commits us all to pursue policies to reduce the risk that unsustainable external imbalances will re-emerge. It recognizes the responsibility of countries with reserve currencies, and the role that market-determined exchange rates — coupled with a commitment to refrain from undervaluing currencies for competitive purposes — can play in facilitating global adjustment.
“It can help to create a stronger internal monetary system that avoids destabilizing shifts in capital flows.
“We should build on this foundation and ask Finance ministers and Central Bank Governors, with the support of the International Monetary Fund (IMF), to finalize the details of this consensus promptly.
“If we work together to avoid the kind of imbalances that weakened the global economy on the eve of the crisis, we will bolster the global recovery.
“With these shifts, emerging markets will be an increasingly important source of demand for the global economy.
“In that regard, it is important that we discuss how to move forward on Doha. All G-20 countries have a responsibility to provide the ambition necessary to reach agreement.
“The G-20 Leaders can be proud of our work in the area of financial sector reform. Our cooperation holds the promise of banishing the regulatory race to the bottom and opening the way for a genuine race to the top.
“In the United States, the Dodd-Frank legislation will greatly strengthen consumer protections and financial market integrity. The Basel Accord will allow us to raise standards together in a way that, once fully implemented, will enable us to withstand stresses of the magnitude associated with the recent financial crisis without extraordinary government support. The United States will implement the new Basel agreement on the agreed timelines.
“But now is no time to be complacent. The market will not wait for us to finish. They will test us every day. We need to press on and complete our reform agenda, with new steps to ensure no financial institution is too big to fail.
“We must work together to ensure large interconnected firms have a greater capacity to absorb losses. Each of us must also put in place a strong national resolution regime that protects taxpayers, and we must build on top of our national systems a framework for cross-border cooperation to promote the safe wind down of even the largest and most complex global institutions.
“We must press ahead with the other important financial sector reform items on this agenda.
“We need to work together to assure that the momentum of reform does not falter. We should also take great pride in the historic progress that we have made to modernize the world’s economic governance institutions over the past 2 years.
“The IMF now has the resources it needs to fight crisis, better tools for preventing future crisis, and more effective governance.
“These reforms, like our plan to support a well-balanced global recovery reflect the growing role and responsibilities of dynamic emerging market countries in the global economy.
“Finally, we should advance our cooperation to address common global challenges. The Korean presidency has highlighted the key role growth has played in lifting so many out of poverty, especially in emerging Asia, and drawn attention to what we all can do to increase the potential for inclusive growth in low-income countries.
“We should make sustained efforts to carry through with our groundbreaking Pittsburgh commitment to phase out fossil fuel subsidies.
“And we should recognize our special responsibilities to prevent corruption and promote a clean business environment.
“This is an ambitious agenda, but the circumstances demand no less. I want to express particular appreciation for the leadership shown by President Lee of Korea in advancing this agenda. Together, we have important work to accomplish in Seoul.”