LONDON, Oct 15 (Reuters) - The director general of the World Trade Organisation on Thursday warned policymakers that growing currency tensions could result in the return of 1930s-style protectionism.
In an interview with Britain's Guardian newspaper, Pascal Lamy was quoted as saying that as governments are seeking to boost their growth by manipulating their exchange rates, the next step would be the erection of tariff barriers.
"We have been living with this for two years," he told the newspaper on a visit to London to meet government ministers.
"The question is whether this (the anti-protectionist mood) is stable or risks being dented by currency developments. There is a risk and the risk is not nil."
Lamy told the paper that a currency war and protectionism were the only two problems the global economy had not faced during the crisis of the past three years.
He warned that the reluctance to use protectionist measures was now being tested.
"What should be avoided is a domino effect, where you get a beggar-my-neighbour, or tit-for-tat, chain and it sours and sours," he said. (Reporting by Karolina Tagaris; editing by Kazunori Takada)