Barack Obama’s misery is set to continue this week as G20 nations, led by Germany, attack the US over its fresh round of quantitative easing (QE).
The Federal Reserve’s decision to launch $600bn’s (£371bn) worth of QE last Wednesday has drawn criticism for devaluing the dollar. Brazil’s foreign trade secretary Welber Barral said of QE2: “They are policies that impoverish those around them and end up prompting retaliatory measures.” An advisor to the Chinese central bank Xia Bin wrote recently that the policy would make “another crisis inevitable”. Obama wants to forge a deal to limit current account surpluses to four per cent of GDP, arguing that China’s surplus artificially depresses the yuan and strengthens the dollar.
Meanwhile, President of the World Bank Robert Zoellick told the Financial Times leading economies should consider readopting a modified global gold standard to guide currency movements.