Finance policy makers from the world's 20 largest economies and the heads of the World Bank and International Monetary Fund are in South Korea. Their two-day meeting, which began Friday, focuses on avoiding a currency war that could lead to another global economic downturn.
The Group of 20 nations have a consensus on which way they need to go in terms of currencies. That is the word from Canada's finance minister, Jim Flaherty. He spoke Friday just before the G20 finance ministers and central bank governors began their meeting.
"Where we're trying to get to is an action plan that will avoid the temptation by some countries to protect their currencies in different ways," Flaherty said.
None of the G20 members, he explained, wants to be confrontational or leave here without an agreement.
Officials from host South Korea predict some progress will be made on resolving the currency issue.
There are growing concerns that many nations may competitively depreciate their currencies to protect exports.
Many economists, however, caution not to expect any sort of grand bargain similar to the 1985 Plaza Accord, which addressed the value of the U.S. dollar.
Ahead of the G20 session, ministers of the G7 economies huddled. Canada's Flaherty, who chaired those talks, said there was a "frank exchange of views" at the informal meeting
China, as the number two economy, faces pressure to stop controlling its currency, which the United States, European Union and Japan say is undervalued.
The weakened U.S. dollar has prompted more money to pour into Asian currencies where there is a better return on investment. But there are concerns that this flow of money could destabilize economies.
But research fellow Jeong Young-Sik at the Samsung Economic Research Institute in Seoul does not envision a unified Asian stance at this G20 meeting.
Jeong expects that Japan, as a highly developed country, will take a stance closer to that of the United States. South Korea and China, he explains, will be more sensitive to the appreciation of their own currencies.
Japan's finance minister, Yoshihiko Noda, earlier this month said South Korea's role as summit chair would be called into question if it repeatedly intervened to weaken its currency, the won.
But Noda, on Friday, also rebuffed a U.S. proposal that all G20 nations agree on a target for current account balances to ease currency tensions. He called numerical targets "unrealistic."
U.S. Treasury Secretary Timothy Geithner in a letter to G20 members, urges countries running big trade surpluses - notably China - to change policies to boost domestic sources of growth and support global demand. At the same time, he says countries that have trade and budget deficits, such as the U.S., should focus on sustainable policies to cut both.
The meeting here, which ends Saturday, is to set the agenda for next month's G20 leaders' summit in Seoul.
Gyeongju is playing host to the G20 finance ministers and central bank governors. On the outskirts of the capital of the ancient Silla kingdom is Yangdong Village.
