G20 agrees ways to measure risk

French Finance Minister Christine Lagarde (r) is chairing the meeting

Finance ministers and central bankers from the G20 are meeting in Washington to try to come up with a plan to reduce global economic imbalances.

But forging a consensus may not be easy amid the current threats to stability, such as high oil prices and debt levels, and Middle East unrest.

The G20 gathering follows Thursday’s meeting of ministers from the G7 countries.

The World Bank and the International Monetary Fund meet at the weekend.

The G20 accounts for 85% of global output and is now the main forum for trying to reform the world’s financial system.

Many economists believe that global imbalances contributed to the recent financial crisis.

Emerging market countries reinvested their surpluses in Western markets, causing banks to take excessive risks, so the argument goes.

Finance ministers agree that they must find a solution to these kind of imbalances.

“I think there will not be controversial discussions on that today,” German Finance Minister Wolfgang Schaeuble said as he arrived on Friday.

But countries do disagree over how quickly they need to act.

China recognises that it must open its economy and allow its currency, the yuan, to get stronger, but it wants to do it at its own pace.

The US, on the other hand, wants to see this happen much faster.

After its last meeting in February, the group reached a deal on indicators to detect the economic imbalances.

Over the next few days they hope to flesh out the details that would allow them to list the countries with the biggest problems, says the BBC’s Michelle Fleury in Washington.

But although the global economy is on the path to recovery, the meeting takes place at a time when plenty of threats to growth remain.

Among the challenges are continued inflation in China and debt problems in Europe.

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