FINANCE chiefs of the world's dominant economies were close to agreeing on how to track dangerous imbalances in the global economy, part of the Group of 20 rich and developing nations' efforts to prevent another financial crisis.
European Union Monetary Affairs chief Olli Rehn said he was confident that there would be agreement "to identify and address global imbalances," but that discussions on the precise indicators were still continuing.
The talks yesterday focused on coming up with a list of indicators to measure imbalances: current accounts, real effective exchange rates, currency reserves, as well as public and private debt levels, Mr Rehn said. The current account measures trade and capital flows into and out of a country.
Germany's Deputy Finance Minister Joerg Asmussen said a majority of countries supported sticking to those five indicators. China in particular has so far opposed targeting exchange rates as it has resisted letting its own currency, the yuan, appreciate more quickly against the dollar.
French Finance Minister Christina Lagarde warned that a failure to address imbalances "leads us straight into the wall of another debt crisis," while President Nicolas Sarkozy said that countries must not get complacent as big parts of the world are starting to recover from the crisis that had championed the G-20 as the new platform for global decision making.
"That would be the death of the G-20," Sarkozy warned.
France has set an ambitious agenda for its G-20 presidency in an attempt to revive the grouping, after a meeting of heads of state in Seoul last year failed to come up with specific yardsticks for measuring imbalances. But the year's first gathering in Paris left many of the more difficult questions to be decided at later meetings.
In their working groups yesterday and today, officials will not even attempt to set firm limits for when imbalances actually become dangerous. The still more difficult question of how to enforce any thresholds that leaders eventually sign up to is yet further off the agenda.
'Name and shame' policies like those used in the fight against international tax havens would be one.