The Financial Times reported yesterday that Britain, Germany, and France will hold an economic summit next month to deal with “financial turbulence” in world markets.  While hedge funds and investments will certainly be on the roster of discussion topics, one can also presume that the leading EU countries will ponder how to deal with Chinese and Asian currency manipulation.

A coordinated realignment of Asian currencies relative to the euro and dollar is one of the best steps that can be taken to promote global financial stability.

Noting the spirit of cooperation involved in pulling EU leaders together for next month’s summit, ManufactureThis wonders if they would also be willing to join in a slightly larger Roundtable—one along the lines of that suggested last week by Rob Scott of the Economic Policy Institute (EPI ).  In a prescient Washington Times op-ed, Scott called for a new Plaza Accord in which the major economic powers could come together to hammer out the currency imbalances that are currently distorting world markets.  Chief among these is China’s grossly undervalued yuan—a millstone for U.S. manufacturers, and now a thorn in the side of the EU and Japan.

It’s going to take concerted action to fix an unsettled world picture, but this is exactly what’s needed right now—cooperative work to fix a common problem.
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This entry was posted on Wednesday, December 19th, 2007 at 12:02 am and is filed under Holding China Accountable, Currency Manipulation, Enforcing Trade Laws. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.