Prime Minister Stephen Harper has left for this week's G20 meeting in South Korea amid concerns that a brewing "currency war" and trade imbalances could dominate talks on the global economic recovery.
The prime minister, who departed Winnipeg for Seoul, the South Korean capital, on Tuesday afternoon, has warned his G20 counterparts ahead of the summit not to let the struggling recovery distract them from cutting budget deficits and trade imbalances.
In a letter to the G20 leaders last week, Harper reminded them of promises made during an earlier summit in Toronto in June to cut deficits and debt and a month ago to agree on guidelines for their current accounts.
But several G20 countries, including China and Russia, have expressed their anger over the U.S. decision to continue with quantitative easing — a process whereby central banks "print" more money and use it to buy assets such as government and corporate bonds held by commercial banks and other financial institutions.
The U.S. Federal Reserve announced last week that it would embark on another round of buying U.S. government debt to stimulate the economy, in the form of monthly purchases averaging $75 billion US until mid-2011, for a total of $600 billion. The action has driven down the value of the U.S. dollar, while driving up other currencies and creating a strain on export markets.
Following the summit, Harper will travel to Yokohama, Japan, for this year's forum for Asia-Pacific Economic Cooperation.