The annual meeting of the International Monetary Fund (IMF) and World Bank, which concluded in Tokyo yesterday, was marked by growing divisions between the major powers amid a worsening outlook for the world economy.
Before the meeting even began, tensions between China and Japan over the disputed Senkaku/Diaoyu islands in the East China Sea led to a decision by China’s central bank governor Zhou Xiaochuan not to attend.
Sharp disagreements over the US Federal Reserve’s “quantitative easing” came to the surface in the final two days of the meeting. On Saturday, Guido Mantega, Brazil’s finance minister, who has warned of “currency wars” as a result of the Fed policy because it lowers the value of the US dollar, branded the policy “selfish”.
Fed chief Ben Bernanke replied the next day when he insisted that the ultra-loose monetary policy not only boosted the US economy but helped support the global economy as well.
However, Masaaki Shirakaw, the governor of the Bank of Japan, which is engaged in its own version of quantitative easing, warned that the policy could be creating the next financial crisis as it “may have parallels with the environment that gave rise to the great credit bubble of the 2000s.”
Another conflict, between the IMF and Germany, erupted when IMF managing director Christine Lagarde took the conference floor on Thursday to call for Greece to be given more time to implement its austerity programs. She indicated that European countries should hold back budget cuts and tax increases if growth weakened.
Source and full story: WSWS, 15 Oct 2012