‘Currency War’ minister asks for overhaul of system.

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Brazilian finance minister Guido Mantega once again appealed for an overhaul of the currency system in an interview given prior to last week’s G20 meeting in Paris.   

In his interview Mantega called attention to increasing commodity prices and blamed speculation and easy monetary policy for their rise as well as citing excessive liquidity in developed countries as the cause of destabilising flows of capital into developing economies.

Continuing along the same theme as his previous ‘international currency war’ statements, he attacked the inefficiency of the international monetary system and said that the big economies must act to work towards a solution to the problems cause by a slipshod monetary policy.   In particular he advocated the importance of Special Drawing Rights from the IMF.

On commodity prices, Mantega said Brazil was completely against any mechanism for controlling them, as, he argued, they would regulate themselves if less easy money was available and advanced countries found alternatives investment away from the commodities market.  

Although Guido supports a floating currency exchange system and freely moving capital in principle, he maintained a solid defence on his country’s own capital flow restrictions stating that he had no alternative due to other nations using the exchange rate system as their main weapon in the ‘trade war’.  

In other news from the Paris summit, ministers reached an agreement as to which indicators should be used to detect economic imbalances, the agreement being to include; the current account, public debts, private debt and savings rates.

And a promise was made by the G20 member states not to implement protectionist measures in view of the rising commodity prices predicament.