Inflation poses a "great threat" to global growth, risking dangerous unrest if food prices soar out of people's reach, Nicolas Sarkozy, the French president, has warned the world's finance ministers.
Rising prices pushed up by the climbing costs of raw commodities present a "social issue" , he argued in a rallying cry to avoid the "hunger riots" he sees looming.
Mr Sarkozy called for a "global strategy aimed at… ensuring food stability" as he formally kicked off a two-day meeting of finance ministers from the G20 countries, which together account for 85pc of world economic output.
France wants greater transparency and regulation of commodities prices and derivative trading to stop markets being driven by speculation, as opposed to demand.
"A market without rules is a market which is governed by speculation," Mr Sarzoky said. "Markets have to have, woven into them, rules."
Rising food prices are causing headaches for politicians worldwide and are helping to push up inflation in the UK, which is currently double the target level. The Chancellor, George Osborne, will back the argument for more transparent data about commodities.
However, major producing nations are worried about what impact tighter rules might have on investment. Mr Sarkozy acknowledged his was an "ambitious agenda" and admitted he would not achieve all his goals in the year France holds the G20 presidency.
In the near term, the G20 delegates are focusing on global trade imbalances and how to calculate who needs to do what to "rebalance" the world economy.
After dining last night at the Elysée Palace, ministers will today try to agree which indicators – or warning signs – will be used to identity and measure potentially dangerous surpluses and deficits, and signal the need for action.
"If we do nothing, world imbalances are going to become greater," Mr Sarkozy said, arguing for action not words. "I hope your debates will not get bogged down in interminable discussion on these indicators."
Canadian finance minister Jim Flaherty has said there was already consensus on two indicators – measuring public and private debt – before ministers sat down. However, China, which enjoys a huge trade surplus, has rejected plans to use real exchange rates and currency reserves as indicators. Chinese finance minister Xie Xuren argued emerging markets need a certain buffer of reserves to deal with crises and shocks.
Mervyn King, the Bank of England's Governor, yesterday focused on the trade imbalance issue as he spoke on the event's sidelines. If co-operation cannot be achieved voluntarily then "a more rules-based system" might need to be considered to rebalance global demand and stave off the risk of renewed protectionism or another financial crisis, he warned.
Ben Bernanke, head of the US Federal Reserve, defended the US's loose monetary policy which emerging economies have criticised for unleashing a destabilising tide of money in their direction. Nations should look at what steps they themselves can take to steady themselves, he suggested.
"Countries with excessive and unsustainable trade surpluses will need to allow their exchange rates to better reflect market fundamentals and increase their efforts to substitute domestic demand for exports," he said.
Source: Telegraph
www.telegraph.co.uk
Rising prices pushed up by the climbing costs of raw commodities present a "social issue" , he argued in a rallying cry to avoid the "hunger riots" he sees looming.
Mr Sarkozy called for a "global strategy aimed at… ensuring food stability" as he formally kicked off a two-day meeting of finance ministers from the G20 countries, which together account for 85pc of world economic output.
France wants greater transparency and regulation of commodities prices and derivative trading to stop markets being driven by speculation, as opposed to demand.
"A market without rules is a market which is governed by speculation," Mr Sarzoky said. "Markets have to have, woven into them, rules."
Rising food prices are causing headaches for politicians worldwide and are helping to push up inflation in the UK, which is currently double the target level. The Chancellor, George Osborne, will back the argument for more transparent data about commodities.
However, major producing nations are worried about what impact tighter rules might have on investment. Mr Sarkozy acknowledged his was an "ambitious agenda" and admitted he would not achieve all his goals in the year France holds the G20 presidency.
In the near term, the G20 delegates are focusing on global trade imbalances and how to calculate who needs to do what to "rebalance" the world economy.
After dining last night at the Elysée Palace, ministers will today try to agree which indicators – or warning signs – will be used to identity and measure potentially dangerous surpluses and deficits, and signal the need for action.
"If we do nothing, world imbalances are going to become greater," Mr Sarkozy said, arguing for action not words. "I hope your debates will not get bogged down in interminable discussion on these indicators."
Canadian finance minister Jim Flaherty has said there was already consensus on two indicators – measuring public and private debt – before ministers sat down. However, China, which enjoys a huge trade surplus, has rejected plans to use real exchange rates and currency reserves as indicators. Chinese finance minister Xie Xuren argued emerging markets need a certain buffer of reserves to deal with crises and shocks.
Mervyn King, the Bank of England's Governor, yesterday focused on the trade imbalance issue as he spoke on the event's sidelines. If co-operation cannot be achieved voluntarily then "a more rules-based system" might need to be considered to rebalance global demand and stave off the risk of renewed protectionism or another financial crisis, he warned.
Ben Bernanke, head of the US Federal Reserve, defended the US's loose monetary policy which emerging economies have criticised for unleashing a destabilising tide of money in their direction. Nations should look at what steps they themselves can take to steady themselves, he suggested.
"Countries with excessive and unsustainable trade surpluses will need to allow their exchange rates to better reflect market fundamentals and increase their efforts to substitute domestic demand for exports," he said.
Source: Telegraph
www.telegraph.co.uk
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