Germany is staunchly against setting limits on current account balances at the Seoul G-20 summit, Chancellor Angela Merkel said, attesting to a great divide on the U.S.-led proposal to end currency conflicts.
In a meeting with South Korean correspondents on Tuesday (local time), Merkel criticized the U.S. proposal to bind countries to rules on their currency policies as one that "doesn't deserve consideration."
"Each nation should compete in a fair environment with their commodities, and the foreign exchange rate should reflect the economic powers of each country," Merkel said in the group interview conducted in German.
Merkel is to attend the two-day summit of the Group of 20 nations that opens in Seoul on Thursday and hold bilateral talks with South Korean President Lee Myung-bak.Following the U.S. Federal Reserve's announcement last week that additional quantitative easing measures would be forthcoming, the German chancellor countered the U.S. policy, saying she will instead address a global exit strategy during the Seoul summit.
"In the previous summit in Toronto, the nations agreed to cut by half their budget deficits by 2013," she said. "In the upcoming summit, there will be discussions about in which countries and when the exit strategy should be implemented, and the conditions of the exit strategy will be also discussed with the United States."
Merkel expected the summit of the world's 20 most advanced nations to also address reforming the International Monetary Fund in order to enhance global power balances, setting financial restrictions to prevent risks and building a global financial safety net. Merkel promised Germany's support for South Korea's proposal on development commitments, saying it will help enhance global stability.
The first female German chancellor, who was born in East Germany and will be making her first visit to Korea, said Germans can relate to the divided situation of the Korean Peninsula. In case the two Koreas reunify, humanitarian measures should take precedent to financial aid as the former would help North Koreans adjust themselves to a free society, she said.
"The Korean Peninsula still remains divided, but Korea and Germany share a similar fate," she said.
South Korea is a "good partner for Germany," but it is also a "rival" to Germany's shipbuilding and automobile industries, she added.