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Commentators are asking whether the 20 finance ministers meeting in Seoul later this week will be able to reach an agreement which could avert a currency war.

[registration required] the "seven pillars of friction" which, he concludes show the G20 as increasingly illegitimate, including the "manipulators v manipulated":

"America accuses China of manipulating its currency by deliberately undervaluing the renminbi. China retorts that it is America that is manipulating the markets by printing dollars. The rest of the G20 worries about being caught in the crossfire of a global currency war. Some, particularly the Indians, seem more concerned about the Chinese undervaluation. Others, such as the Germans, seem more worried by the actions of the US Federal Reserve. But nobody likes being caught in the middle."

Former minister of economic affairs and the Treasury of Turkey, [registration required] in the ability of the G20:

"It is unlikely anything more concrete can be agreed at this week's summit, except perhaps more detail on indicators to determine current account limits, but no more. Some will therefore dismiss the agreement on targeting upper bounds for current accounts as inconsequential and argue the G20 is losing credibility as a 'potential steering group' for the world economy.
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"In fact the agreement, if it is endorsed by the leaders, may constitute a significant step forward for international economic co-operation. First, it is right that the focus has shifted to 'outcomes', in the form of current account imbalances, and away from the exchange rates themselves. After all, if the Chinese surplus were to dwindle to a small amount, with China importing almost as much as it exported, while the Chinese exchange rate remained the same, the world would stop worrying about Chinese exchange rate policy."

Less bothered by talk of currency wars, the the key to recovery is for President Obama to sign more trade agreements:

"The symbolic value of these agreements is also important. Global trade is recovering from its 2009 collapse. And so far there have been no full-out trade wars. But protectionism - trade barriers, but mostly high and unfair export subsidies - is on the rise. In Washington, members of Congress are itching to punish China for its currency manipulation. A weakening dollar is sparking protectionist sentiment in many other countries."

The the talks will be the "tensest yet" saying the best idea to avoid a currency war comes from an unfortunate place:

"Of all the ideas put forward so far, the best has been a proposal from the US that countries should have limits set on how much of a surplus or a deficit they can run in trading with the rest of the world. A country like Germany that consistently runs a big surplus with its trading partners is effectively sucking demand from them. The problem with this idea is that it is America's. The US neither has the economic strength nor the track record of prudent economic governance (that long boom, fuelled by so much private debt) to win this argument. Even so, it is ideas of managing trade a bit more closely that the G20 will need to consider if it is to avoid an unseemly trade squabble."

The the ability of the G20 but warns the French leadership of the group against big thinking:

"Unfortunately, history suggests that big-picture debates on the future of the international monetary system rarely yield results, while diverting attention from smaller, practical goals. France should take note. The G20 will remain worth having only if it sticks to the art of the possible."

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