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Currency Wars: World Banks Plead With G20 To Avert Global Currency Clash

Feb. 11, 2013 10:30pm Becket Adams

The Institute of International Finance to G20 Leaders: Please Dont Start a Currency War

Left to right: Presidents Vladmir Putin, Francois Hollande, Hu Jintao, Barack Obama, Chancellor Angela Merkel, and Prime Ministers David Cameron and Shinzo Abe. (Getty Images).

The world’s biggest banks on Monday begged the Group of 20 economic powers to work together to avoid a clash of currencies, further evidence that fear of an impending “currency war” (i.e. competitive devaluation) is not merely something dreamed up by “wingnut” circles.

Representing more than 470 financial firms, the Institute of International Finance warned that global addiction to “quantitative easing” (money-printing) could lead to “possible discord on exchange rates” and put a strain on international relationships.

“We believe major central banks should focus on enhancing their cooperation, especially of their communication strategies, to guide market expectations and thus help avoid a disorderly interest rate adjustment process and undue exchange rate volatility,” the IIF said in a letter to Russian Finance Minister Anton Siluanov, who will chair the summit later this week.

“The challenge clearly is for both mature and emerging market economies to develop appropriate strategies … to deal effectively with the eventual reversal of low-interest rate policies and quantitative easing,” the letter adds.

It’s slightly ironic that the IIF letter is addressed to Russia’s Finance Minister considering the fact that a) it appears that the Russians are preparing for major global devaluations and b) the fact that it was the first deputy chairman of Russia’s central bank, Alexei Ulyukayev, who made headlines earlier this year after he warned of a looming “currency war.”

“Currency markets have witnessed some hefty gyrations in recent months due to widening gaps between the policies of the world’s major central banks as they seek to revive growth and, in some cases, consider how to withdraw emergency financial support that has kept banks and economies afloat during the post-financial crisis years,” CNNMoney notes.

“Most marked has been the rapid devaluation of the yen against a range of currencies,” the report adds.

Indeed, you may recall that following the election of Prime Minister Shinzo Abe in December, the Japanese yen fell precipitously on his promises of greater economic stimulus. (One initiative announced by Abe calls for an open-ended program to purchase government bonds. Sound familiar?)

It is believed that, along with Abe’s rhetoric and promises of direct intervention, Japan’s economic stimulus projects have contributed to the devaluation of its currency against the euro and the dollar, rankling world leaders.

And then, of course, there’s China.

Lael Brainard, the Treasury official who will lead the U.S. delegation to a G20 meeting later this week, warned Monday that China needs to do more to “let the yuan float more freely in the market,” The Associated Press notes.

“It will be important that China … reinvigorate the move to a market-determined exchange rate and interest rates,” she said.

However, given its desire for cooperation and consensus, any statement on competitive devaluation from the G20 will most likely be low-key and avoid accusatory language.

Follow Becket Adams (@BecketAdams) on Twitter

Featured image courtesy Getty Images. This post has been updated.

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Comments (33)

THE_SUPPLANTER
Posted on February 12, 2013 at 8:46pm
This seems to me like it will be the first of a series of talks to divert a “world crisis” through joining currencies, or there will be a regulatory system put in place that has the power to set the value of the currencies to make sure that one nation cannot “money-bomb” another nation “unfairly”.

Whatever the out-come, it will not be good…

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Military Vet
Posted on February 12, 2013 at 11:53am
No organization or group of organizations has enough power to avert the impending financial collapse. Buy physical gold and silver, beans and bullets.

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steveh931
Posted on February 12, 2013 at 11:26am
America’s debt is one of the biggest, if not the biggest threat to our national security. We are now at 105% debt to GDP ratio and climbing. Government is spending 1 trillion more annually than it’s taking in, taxes are already to high only to get higher, hyperinflation will set in shortly devaluing the U.S. Dollar even further, and unfunded liabilities are at 122 trillion The U.S. Government is involved in business transactions with some, not so friendly nations, requiring cautious steps to be taken. Don’t even want to discuss what could happen if someone decides to trip a partner in crime.

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- JRook
  Posted on February 12, 2013 at 11:53am
  “it appears that the Russians are preparing for major global devaluations” It takes a real conspiracy nut to infer that Russia increasing its gold holdings to 1/8 that of the US or slightly over $50 billion would be an adequate hedge against world level currency valuations. Even the US gold reserves at $450 billion are a drop in the bucket and obviously could not and would not protect us from any significant currency valuations.
  
  Report this comment
- AbrahamsSheepdog
  Posted on February 12, 2013 at 12:55pm
  Both valid points. He buys islands off Alaska’s coast has his hand deep in oil. He is a old school real Chicago thug. He knows 0 is a coward too.
  
  Report this comment
NoMoMrNiceGuy
Posted on February 12, 2013 at 8:18am
HOOAH ! Hang on kids this coaster is about to get a bit bumpier !

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NOBALONEY
Posted on February 12, 2013 at 6:32am
Time to go to the video tape replay Glenn! Mutually Assured Economic Destruction

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Lord_Frostwind
Posted on February 12, 2013 at 4:30am
Oh, now it’s a problem for the mighty G-20 to handle. Welcome to the party, but looking at the guest roster I seriously doubt they will come up with any solutions except, A. Tax the Rich, B. Tax the Rich, or C. LOOT EVERY ASSET WE CAN!!!

“Full Speed into the Iceberg fields, God himself cannot sink the S.S. Economic Stimulus!”

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lassiegirldawn
Posted on February 12, 2013 at 1:16am
I see Beck is still backing Goldline. I have a relative that bought $70,000.00 worth of coins and when they got the sale invoice, their investment showed $36,000.00. Goldline screwed them out of $34,000.00. I would really watch who his advertisers are and Google Goldline Scam.

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- johnpaulkuchtajr
  Posted on February 12, 2013 at 6:26am
  That’s a serious accusation. A 50% fee is incredible.
  
  We’re talking a basket of federal crimes and a very bad rap on Beck for advertising the firm.
  
  Any back-up for your claim, like a site where we could go to see the cancelled check and the final invoice?
  
  “Remember Benghazi and ALL the Traitors!”
  
  Report this comment
- Ghostinthemachine
  Posted on February 12, 2013 at 12:38pm
  That is an astonishing accusation. I have never heard of such a thing by a national company. Do you have anything to back this up or is this just more of the past lies heaped on Beck and Goldline by progressives?
  Facts speak for themselves. Media and political attack on Beck and Goldline: All over the airwaves the year Beck left Fox and seen by millions.; Unknown commenter’s claim that Goldline is crooked: no facts at all.
  
  Report this comment
Chancellor
Posted on February 12, 2013 at 1:05am
WHY? It all needs to fail so people can learn AGAIN what is important and needed!

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ckhenson
Posted on February 12, 2013 at 12:27am
Gold standard anyone?

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- AbrahamsSheepdog
  Posted on February 12, 2013 at 1:12pm
  Looking that way more and more.
  
  Report this comment
Margyt
Posted on February 12, 2013 at 12:07am
This is why BO isn’t worried about the economy.

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KidCharlemagne
Posted on February 11, 2013 at 11:14pm
“We can’t even define what a dollar is…….”
Ron Paul: Currency Devaluation Is `Dangerous’ – Bloomberg 2/8/2013

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old construction worker
Posted on February 11, 2013 at 11:03pm
China will not allow their money to “float higher”. They don’t want to be paid back with money that is worth less. Would You?

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- JohnofOregon
  Posted on February 12, 2013 at 1:50am
  it no longer matters. a rising tide raises all ships, but remember the same is in reverse.
  
  what is different is that china holds a large percent of operating commerce in the us thanks to the drug addicted washinton insiders, and leftest government addicts.
  
  http://www.guardian.co.uk/news/datablog/2011/jul/15/us-debt-how-big-who-owns
  
  you will note how iran and venzuela are refered to “oil export” nations and north korea is “other”
  
  Report this comment
soybomb315_II
Posted on February 11, 2013 at 11:01pm
Hey Beckett Adams – worrying about concern about currency devaluation does not make you a “wingnut”…….You do work for Glenn Beck, dont you?

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- soybomb315_II
  Posted on February 11, 2013 at 11:08pm
  *worrying about currency devaluation*
  
  Report this comment
- Becket Adams
  Posted on February 11, 2013 at 11:33pm
  Sorry, it was poorly worded. I meant to poke fun at people who pooh-pooh the currency wars. I’ve since clarified the language.
  
  Report this comment
- soybomb315_II
  Posted on February 12, 2013 at 12:32am
  thanks
  
  you never know these days
  
  Report this comment
WINNEBAGOMAN
Posted on February 11, 2013 at 10:57pm
The excess of Industrialized nations have made their publics feeble and cowardous. The designed collapse of the Soviet block and the Chineese way of (you may call is Communism) Despotism and disciplined manner in which it has kept its populous as peasants is comming to fruition. They do not know of the comforts European, American, and Japanese slobs have taken for granted the past 60 years. Now, when THINGS are going to become a little more difficult to come by for us (slobs), they (China, Russia) are going to make a run on the world banks, enriching their GOVERNMENTS (of couse the regular folks will be cut out – don’t want them to find out how the good life is), giving them more leverage not only over their people, but over the wussified (I’m not sure that’s a real word) and terrified, privilege-promised free-marketeers in the Euro-American markets.

Of course they’re not real free marketeers, as they too rely on the government for too much.

There’s a lot here to digest. I expect to get a lot of heat from conservatives and libertarians (which I consider myself to be). Take a close look at what I’m saying. Give me a second read before you start typing: “Troll!”

The overall moral of my story is this: We the people need to take our government back. But we stand no chance, unless we take back our banking system. This is my ode to G. Edward Griffin.

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- soybomb315_II
  Posted on February 11, 2013 at 11:05pm
  no i think you are mostly correct. that is how the great nations always fall – apathy
  
  america has been ripe for the picking because of our debt (federal reserve) and NWO leaders. Eastern asia is restless and will probably take our place – and this has nothing to do with military
  
  Report this comment
Ron Staiger
Posted on February 11, 2013 at 10:57pm
Bring on the currency clash and drive up the price of my gold!

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- soybomb315_II
  Posted on February 11, 2013 at 11:06pm
  the price of your gold might go up, but so will the prices….it would be a wash for you. and also you would have to worry about how to feed and shelter yourself
  
  Report this comment
tonypro
Posted on February 11, 2013 at 10:55pm
Hmmmm…………..I have to wonder if this is the second push for global currency in disguise, since the failing worldwide economy one didn’t happen already.

China, Europe, and Russia led the last charge, wonder who will step up this time.

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woodyee
Posted on February 11, 2013 at 10:54pm
“Representing more than 470 financial firms, the Institute of International Finance on Monday warned world leaders that their addiction to “quantitative easing” (money-printing)…”

Too many world leaders running out of other people’s (taxpayer) money…

Was it Churchill or Mrs. Thatcher that said “Socialism works until you run out of other people’s money.”

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- gyro
  Posted on February 12, 2013 at 6:47am
  Mrs. Thatcher
  we need another like her
  
  Report this comment
justangry
Posted on February 11, 2013 at 10:45pm
Better yet the G20 should round up all the central bankers and throw them in jail.

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- tonypro
  Posted on February 11, 2013 at 10:53pm
  Yeppeeee
  That’s what they did in Iceland, they now have the most aggressive growing economy in the world.
  
  But then again, that’s the opposite of what the criminals in our gov. want.
  
  Report this comment
- WINNEBAGOMAN
  Posted on February 11, 2013 at 10:58pm
  All the “leaders” are owned by the central bankers.
  
  Report this comment
- AUsername
  Posted on February 12, 2013 at 9:36am
  the people need to give them a crystal night.
  
  Report this comment

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