Today, concern the Group of Twenty (G20) summit in South Korea the fifth officially kicked off in Seoul, the summit will discuss exchange rates, global imbalances, financial safety net, reform of international financial organizations and development issues. Market expectations, the Fed has launched a new round of the quantitative easing policy, the exchange rate issue will again become the hottest topic of the summit.

The third round of the United States or brewing loose policy

The Fed has launched the second round of quantitative easing policy has given rise to controversy, emerging market countries have criticized the Fed’s new measures to make the U.S. dollar continuing to slide, resulting in the influx of hot money capital markets in emerging economies, to bring the countries and regions imported inflation and the global economic recovery and security. The second round of the quantitative easing policy of the Fed controversy is not flat, the International Monetary Fund (IMF) Western Hemisphere director Esa Aguirre said, as the U.S. economy from lack of recovery, the Fed may start the third round of the quantitative easing policy.

Investors have become increasingly concerned that the third round of the Fed’s introduction of quantitative easing is not impossible. St. Louis Fed President Bullard also noted that, if necessary, the Fed may increase the size of quantitative easing, the Fed will purchase in mid-2011 debt plan on re-evaluation.

Pacific Investment Management Company (PIMCO) IL iLen CEO, said the second round of the quantitative easing policy of the Federal Reserve can not solve the problems facing the U.S. economy, while filling the global currency market is gradually warming up the tension, the Federal Reserve to introduce more quantitative easing only a matter of time.

G20 summit in South Korea Ministry of Finance and Planning, said yesterday that the Preparatory Committee, national deputy finance ministers and other officials on the “Seoul Declaration,” the contents of the draft final coordination and modification. Although the parties on financial regulatory reform, global financial safety net, development issues, international financial institutions, reform of the basic agreement, but the exchange rate, and set limits for the current problems are still considerable differences.

States of the United States or as targets of themselves

Fed printing money to promote a large number of global commodity prices hit record highs, the U.S. dollar spamming practices have been the other members of the Group of Twenty emerging economies consistent criticism. China’s Vice Finance Minister Zhu also expressed concern about U.S. monetary policy and the question and said the summit in Seoul to exchange views frankly with the United States. Canadian Finance Minister Jim Flaherty said yesterday that the Fed’s policy of quantitative easing will be the G20 to discuss important issues.

German Chancellor Angela Merkel said the U.S. policy of quantitative easing by the artificially low exchange rate to stimulate exports, is a short-sighted behavior. German Economy Minister Bruderle even think that the U.S. dollar in the indirect manipulation.

The face of increasingly fierce criticism of the United States President Barack Obama said yesterday that the strong U.S. economy is critical to the global economic recovery, hopes that all countries put aside their differences to support global economic growth. World Bank President Robert Zoellick said yesterday that tensions surrounding the exchange rate is likely to continue. But sources, G20 draft statement showed that the economy cope with fluctuations in the exchange rate over-vigilance disorder, but the communique issued after the Fed may not be referred to quantitative easing measures.

It is noteworthy that, in national controversy, the dollar index has been achieved recently, “triple sun”, the voice of U.S. call after another. However, analysts said, hedging demand once again become the main driving force pushing the dollar. If the G20 summit ended without result, the dollar may be under pressure again. In the long run, the Fed may continue to introduce new quantitative easing, which is undoubtedly bad for the dollar.

Seats in emerging markets is expected to finalize the IMF

IMF has decided to include emerging market countries, the countries represented, including the transfer of shares to increase the representation of emerging market and developing countries. Will attend the G20 summit in Seoul, President Hu Jintao of China told South Korean media said the summit should be the strengthening of world economic recovery, reform of the international financial system, increase in emerging market countries and developing countries a voice in the international financial institutions.

Some analysts said that the parties will in the G20 summit on the emerging markets of the seats in the IMF reached a substantive consensus. G20 draft statement also shows that countries are ready to deal with the reform of IMF work.

In addition, sources said, “Basel Ⅲ” in the capital and liquidity on the regulatory framework in the G20 summit in Seoul, formally approved, the global banking industry faces a new round of regulatory reform. At the same time, global regulatory agencies is not listed is considered “too big to fail” bank list, most Asian banks are excluded from the G20 proposed systemically important financial institutions as well.

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