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November 11, 2010    

Mervyn King urges G20 leaders to stand firm over trade imbalances

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by Kay Murchie

The Bank of England Governor, Mervyn King, is urging the group of G20 nations to address the issue of trade imbalances.

His comments echoed those of the US who said it wants the G20 group of nations to agree to curtail “excessive imbalances” in world trade.

Mr King said: “We are very much in the position that we need to demonstrate now that every country is determined to work together to a joint mutual resolution of these imbalances.”

The comments come as today’s G20 gathering gets underway in South Korea.

The group of G20 nations, which accounts for about 85% of the global economy, comprise the world’s 19 leading national economies (Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, Republic of Korea, Turkey, US, UK) and the European Union.

The threat of a currency war is set to be a major topic at the summit, as is the US Federal Reserve’s latest round of quantitative easing.

The Fed’s move has been widely criticised by several other nations, including Germany, China and South Africa.

Germany described the US monetary policy as “clueless” and said they would create “extra problems for the world”, while Brazil said the fresh round of stimulus would not boost production or create jobs in the US, but would instead drive money into countries with higher interest rates and cause inflation.

Today, a spokesperson for the G20 summit said little progress has been made.

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