G8 and G5 aim on preventing devaluation of their currencies

07-09-2009 14:12

A concept declaration proved that the G8 summit has resulted in an agreement which aims on avoiding devaluation of their currencies in order to stimulate their exports, followed by disadvantaging other nations. Today, leaders of the G5 will meet the G8 leaders (Russia, Italy, Canada, Germany, the US, France, the UK and Japan), while the summit in L'Aquila, Italy, ends tomorrow.

Stable and well-functioning

The concept underlines the convention, made at the G20 summit in April, despite calls from Russia, China, Brazil and India to deliberate an alternative global reserve currency. The officials decided on “avoiding competitive devaluation of their currencies,” showed by the concept declaration which will be published after today’s conference at the end of the G8 summit. The leaders also decided on “stimulating a global monetary structure which operates adequately and steady”.

Diversified and rational

Dmitry Anatolyevich Medvedev, president of Russia, suggested alternative options regarding the global reserve currency, as a result of the international financial slump and due to the explosive rise in lending in the US. Nevertheless, a serious alternative for the US Dollar as the world reserve currency should be viable. “It is essential to improve the global currency system in order to create an improved reserve currency structure and foreign exchange issuing, which will lead to relative stable rates of the reserve currencies, resulting in a varied and balanced global reserve currency system,” commented Ma Zhaoxu, spokesman for the Ministry of Foreign Affairs of the People's Republic of China (PRC), as well as the director-general of its Information Department.

Long-term goal

Luiz Inácio Lula da Silva, current President of Brazil, and a founding member of the Workers' Party, requested the largest developing countries to utilize their proper currencies in order to arrange their trade accounts, according to Shivshankar Menon, India's foreign secretary. The Group of Five (G5), the US, Germany, Japan, France, and the UK, reviewed “the application of variable currencies and focused less on reserve currencies specifically,” according to India's foreign secretary. However, Brazil’s president initiated to reflect on utilizing their proper currencies in order to arrange their proper trading accounts mutual. Shivshankar Menon also commented: “for all the nations its obvious that an alternative reserve currency is a long term target.”

Dollar will remain its status

In May, Lula da Silva and Hu Jintao, paramount leader of the People's Republic of China, reviewed options to utilize their currencies in trade as China became the most important trading partner of Brazil substituting the US. “In spite of all speculations, I don’t believe that the US Dollar will lose its status of global reserve currency,” stated Robert L. Gibbs, the current White House press secretary.