Seven G20 countries face scrutiny over imbalances
Seven G20 countries face deep scrutiny over their fiscal and financial imbalances, French Finance Minister Christine Lagarde said Friday, announcing a new framework for assessing global economic risks.
A Group of 20 delegation member told AFP the seven "included the G5" -- the United States, France, Britain, Japan and Germany -- and "two big emerging countries," suggesting China and India.
Lagarde would only divulge that France was one of the seven countries in which the G20 sees systemic risk, based on a newly agreed set of "mechanical" measures, Lagarde said, while not divulging the others.
But she said they were "clearly large economies" that would now be subject to a "second step" of assessment that could end up with policy prescriptions set by their G20 brethren later this year.
The G20 meeting Friday was to address imbalances in trade, capital flows, debt and foreign exchange that pose systemic risks to the global economy; it was widely expected that the US, China, Japan and Germany would be on the list.
In a statement the G20 announced that, aside from the new imbalances guidelines, it would more closely assess risky capital flows, unhealthy reserve accumulation, skewed exchange rates, and other symptoms of artificial or unhealthy balances in the global economy.
"We also agreed on the need to strengthen further the effectiveness and coherence of bilateral and multilateral IMF surveillance, particularly on financial sector coverage, fiscal, monetary and exchange rate polices," it said.
© 2011 AFP