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G20 Summit Ends with No Clear Path Forward on Trade or Growth

G20 Summit Ends with No Clear Path Forward on Trade or Growth

Dimitri Zabelin, Analyst


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Talking Points:

  • The global economy shows strong growth but geopolitical tensions threaten financial stability
  • Policy makers still lack a coordinated program on how to regulate crypto-assets
  • Emerging markets face risk of market volatility due to heightened global risk in the short-medium term

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G20 finance ministers gathered in Buenos Aires on July 22nd to discuss global growth and stability. The summit began with a dark cloud of economic antagonism brewed by the Trump Administration’s recent tariffs and import duties and accusations of currency manipulation. Fed independence was promised after Mnuchin reaffirmed Trump’s full support for central bank autonomy and has no interest in interfering in foreign exchange markets. Global growth continues to be strong but is less synchronized and faces more risk than before, and emerging markets in particular face a high risk of capital outflows and market volatility, especially because of rising trade tensions.

Additional comments made by G20 officials on the trade war:

  • “The impact of protectionist measures already implemented has been -- that’s lucky-- so far very limited. But the risk of escalation is there,” said European Union Economic Affairs Commissioner Pierre Moscovici.
  • France’s Finance Minister Bruno Le Maire stated that the US needed to "return to reason" and paralleled "its unilateral trade actions” to "the law of the jungle."
  • “We refuse to negotiate with a gun to the head.” Affirmed Bruno Le Maire in response to Mnuchin’s demand for EU concessions
  • Jean-Claude Juncker, head of the European Commission stated that duties imposed by the US on the EU go against "all logic and history"

Policy makers are still attempting to find a unified approach and policy toward cryptocurrencies that have in recent years exploded in popularity. Regulators are concerned with the challenge crypto-assets pose in money laundering and tax evasion in addition to their high volatility. The G-20 statement reiterated that cryptocurrencies are devoid of many of the attributes of sovereign currencies, but policy makers only provided limited details on any specific and steps delegates would take to regulate the crypto-asset.

Official comments from G20 delegates during the summit on central bank independence:

  • Central bank "independence is key" says IMF head Cristine Lagarde
  • "Central bank independence is absolutely sacrosanct in my view and there is ample evidence that independent central banks tend to be more successful,” said South African Reserve Bank Deputy Governor Daniel Mminele.
  • “This is not in any way the president trying to intervene in the currency markets whatsoever,” Mnuchin emphasized

These comments were made in light of Trump’s recent criticism of Fed monetary policy and threats of imposing automobile tariffs against the EU that would slow regional and global growth.

  • Trump threatened the EU over Twitter saying “…we will be placing a 20% Tariff on all of their cars coming into the US. Build them here!”

Following the G20 meeting this past weekend, Argentina has selected the theme, 'Building consensus for fair and sustainable development,' for the 2018 G20 Leaders' Summit, and has identified three key issues for the agenda: the future of work, infrastructure for development, and a sustainable food future. The summit will take place between November 30th and December 1st of 2018.

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--- Written by Dimitri Zabelin, Junior Currency Analyst for

To contact Dimitri, use the comments section below or @ZabelinDimitri on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.