GROUP of Twenty finance ministers concluded their two-day summit in Moscow Sunday with a pledge to avoid a global currency war, but Australian Treasurer Wayne Swan thinks they've missed the point.
In a forceful intervention near the end of the conference Mr Swan said much of the talk about "so-called currency wars" was "completely misguided". It "unhelpfully reduced the focus on the G20's critical agenda to boost growth and create jobs".
What other finance ministers thought of as intervention to devalue currencies was more often the byproduct of completely appropriate moves to try and kick-start economies, he said.
"Global growth with a '3' in front of it simply won't cut the mustard if we want to reduce the unacceptably high levels of unemployment," Mr Swan told the summit.
"We all agree that countries shouldn't be targeting exchange rates for competitive purposes, but what we should support is domestically-focused policies in the major advanced economies aimed at boosting growth and jobs.
"There is a big difference between indirect effects on market exchange rates from accommodative monetary policy and actually engaging in competitive devaluation.
"Quite frankly, I think we're seeing central bankers in the world's biggest economies take unconventional measures to support growth and jobs because interest rates are already near-zero and fiscal policy is not providing enough support to growth."
Mr Swan said many advanced economies needed to release "the handbrake" on growth brought on by "damaging fiscal austerity".
"You don't need to slash and burn now to put your budget on a sustainable path over the medium term - in fact, cutting too hard now will rip the guts out of growth and leave you with higher debt later on."
The summit ended with a commitment to "refrain from competitive devaluation".
The new commitment is probably aimed at telling the Japanese that while they can stimulate their economy, they shouldn't target the yen, said Chris Turner, head of foreign-exchange strategy at ING Groep NV in London. "It makes it harder for the Japanese to talk down the yen, but they will let their policies do the talking," he said.
Japanese officials in Moscow insisted the fall in the yen was a byproduct - not a target - of their effort to revive the world's third-largest economy, a view supported by Mr Swan.
Earlier he had told Bloomberg television the yen's devaluation was "a matter for the market". The Japanese approach was "to stimulate their domestic economy. That is also good for the global economy."
Bank of Japan Governor Masaaki Shirakawa said the G20 communique was "absolutely in the same spirit as our monetary policy".
"The Bank of Japan's measures have been and will remain targeted at achieving a robust economy through stable prices," he said.
The ministers also pledged to crack down on tax avoidance by multinational companies. The communique said members were determined to to stop firms shifting profits to pay less tax.