The G20 leaders are so worried that the crisis in Europe will expand in the world that it is likely that the summit in early November will focus on this risk, according to senior EU officials.
“Europe will be in the spotlight at a summit in Cannes,” said European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy, in a letter to other community leaders.
They added, however, that the meeting will also discuss the risks for the developing world coming from the United States and emerging economies.
“The perception of the G20 partners is that if Europe does not solve the debt crisis, it will produce harmful effects for the global economy. We need to show that the EU is determined to do everything necessary to overcome current difficulties”, said the two leaders.
G20 brings together the most powerful developed countries and the developing countries.
The letter shows that many of the global imbalances before the debt crisis in the euro area are still in place, mentioning the undervalued yuan in China and higher costs in the U.S.
“For this reason, we must have a balanced discussion about the various risks to the global economy, including those from the U.S. and emerging economies. All countries should contribute”, reads the letter.
The text reiterates a call from EU finance ministers to set a timetable for expansion of the currency basket of IMF special drawing rights (SDRs).
Some leaders hope that SDR’s can become the new currency used worldwide for reserves to reduce dependence on the dollar.
If SDR’s would include the yuan, the Beijing authorities would be interested to allow currency appreciation, which would help to balance world trade.