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UPDATE 1-G2O agree on how to detect risks to global economy

Published 04/15/2011, 05:01 PM
Updated 04/15/2011, 05:04 PM

(Adds details, background)

WASHINGTON, April 15 (Reuters) - The Group of 20 nations agreed on Friday on a way to measure the potential risks to the global economy posed by national economic policies as part of a plan to avoid a repeat of the 2007-2009 financial crisis.

Countries representing more than 5 percent of the combined gross domestic product of the G20 will be subject to a deeper second-stage analysis of imbalances in their economy, G20 finance officials said in a communique.

France said it would be on that list, which would certainly pull in the United States, China, Germany and Japan as well. French Finance Minister Christine Lagarde said seven countries in all would face heightened policy scrutiny.

The G20 said it would take into account the exchange rates and monetary policy frameworks of its member nations.

While the biggest G20 members would automatically face in-depth analysis, all members of the G20 emerging and developed nations would be subject to the monitoring mechanism.

The communique, however, appeared to offer some room for countries to avoid tough policy prescriptions. "National circumstances will ... be taken into account," the communique said without elaboration. (Reporting by Lesley Wroughton and Emily Kaiser; Editing by Neil Stempleman)

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