The G20 Summit in Korea next week (11th – 12th) will be overshadowed by the fall-out from “currency wars”, hampering any attempt at the improved coordination of policies necessary to help rebalance the global economy. In particular, the US will find it hard to put any substance on its proposals for indicative ceilings for current account balances. We do not think that such targets, while a good idea in many respects, would amount to much in practice. But without tangible commitments from the major surplus countries, a lurch towards protectionism and a global trade war will be increasingly likely.
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