and today my guest is alex. finance ministers of the g twenty countries have reached an agreement not to devalue their currency this seems to have saved the world from what's called the war of currency experts fear a war of this kind could cause chaos on the global markets but is it something we should really be cautious about or are these fears of the past we're asking our guest who is a well known financial analyst and former russian deputy finance minister. the g twenty finance ministers have succeeded in a standoff against china which has been seen as a major troublemaker on the currency markets the u.s. accusing the gene of purposely lowering the value of the yuan which gave chinese gives a competitive advantage on world markets russia has also been worried about possible targets it was as they can boost inflation in the country but use the protective

measures like devaluing currencies would be avoided by the g twenty countries helped calm the markets overall some experts say they still have the amp'd of the world currencies but just peace talks. and welcome to the show well first of all i would ask you about the about this decision taken in korea at the cheap g. twenty meeting the finance ministers decided that they will refrain from weakening their currencies how do you think they will be able to keep this promise i think at least one week in a week because all promises all promises were reached on such type of the meters of course they're not legal legal commitments and express of goodwill and we know very well that in coming days for dollars or for the united states for the know it if we can in phase two and no one knows the size of the magnitude of these actions so if

their action is rather small it's a. hundred two hundred three hundred five hundred billion dollars of course it's will not affect a chorus of markets but if occasionally is almost like said that if me and rich after four trillion dollars of wars these two will. create another two or more on the financial markets so let's wait and see if this commitment is not legal and of course. if you have an event or if you have a need to know for finance ministers you have to reach agreement up on something all this but what's the use of bringing finance ministers of the leading twenty countries together and then talking for for for two three days discussing coming to a decision that will be that will be kept only for a further five days as. we remember with you without the safety and fifteen years ago where there was such a group called to do seventy seven and it is over very important it was really influential group of decision makers who decided their financial political destiny

of the world and decisions made by their group where really influential they were really important and that group of finance ministers was able to make decisions that are where implemented but the situation of the global economy has changed now days even the united states is not as dominant as the country was fifteen years ago who have new emerging countries like china like india who would like to play there all in international sphere and in fact you cannot discuss the situation of the world economy without china so you may discuss it with our brazil without rational without even or without u.k. but you can discuss without china and that resulted in such a group one called to twenty two years ago for the first time when financial turmoil took place but it's a new group with a different interest with different i do all the jury were different economic policy and they have no custom to reach agreement so they're more democratic with

less influential very latest good. of course of the it's more democratic with making taking a call that a number of the countries and by different countries democracy just seven is a global democratic nation and they have a habit to keep the promises in recent months and number of countries have tried to drive down the value of their currencies and their spotlight demeter now stands. japan's intervention has been one of the first episodes of the so-called currency wars when the yen heated its fifteen year high against the us dollar tokyo started a massive sale of its own currency combined with the purchase of the american backed was meant to boost japan's exports and this will help recover the country's economy that was just one event in a chain of similar actions taken by various countries asian as well as european the process was named competitive devaluation this is something china has been doing

for years them planets you want to make experts cheap they go west it's a long time major point and is now criticizing other countries for formal invasions example meanwhile economists believe it's the united states that whose currency was in the first place by printing a lot of money now the chain of currency devaluations are believed to threaten global economic recovery finance ministers from the g twenty countries together last week in south korea to try and tackle the problem they have agreed to would weaken their currencies to boost exports experts think the temptation might prove to be too strong to stand. tall observers say the china have their recent tears have been have been appreciating its currency. yes it's strong because china recognizes the value of your news a little bit lol and then move in a step by step

a lot of. passed by the radio the there's this process was rather fast some way before two thousand and five two thousand and six and then it was frozen for a couple of years and now d.c. is july china once again started to appreciate their currency is it true that the reason for that is is that the us was actually insisting that china gives an appreciative our i would say i would say it is a reflection of the understanding by chinese authorities of the situation that the exchange rate or what changes you are affects the global economy and affects the global imbalances and of course china would not like to be the current were there to blame by the rest of the war for distorting the global economy of course china is is early on in east trying to understand how the chinese economic policy affects the rest of the wall and they try to listen to advisors well here now is a quote by the head of the euro zone john kerry expressing the european point of

view. given. china's import. we do think. the ordinarily significant based appreciation of the real be would promote more growth to both of china and the globe because we do think that the success of dupion recovery is in the best interest of. our concerns as regards reason to worry about this because it's concerted the possibility of the co . this would be destructive as would be in the form of great protections. here's a gentleman trying to express the interest of china well every time i hear interests of china from people like you from from from financial tycoons i always

ask myself interest of chinese business chinese government chinese people so what really do you think is in the chinese interests decreasing or increasing. the kind of saying people business government in the long term long term of course appreciating the current species years for everybody and yes yes the problem is that until once again ideally a decade to go china was original power. fast growing contra but still mainly involved it is the mystical problem in the recent decade china became the second economy and the situation in china affects the rest of the water this is a new situation this is a new situation for the world this new situation for chinese leaders and they have to adjust their domestic policy because previously they were making decisions taken into account all the domestic interests now days they have to recognise that situation has changed and any decision in china affects the rest of the world

affairs. labor effects employment effects of the quantum leap in new york when e.g. in africa in north america and china needs to become the one of the call police in the global be so and that is of was in favor of all chinese comparable population of business of the government well the chinese themselves seem to be rather skeptical about the real motives of the us pressure on china here's a quote by doing director our finance call at china's university of international business and economics. to me were as far as america is concerned the slower china response to the exchange rate were better because the us will always use the currency exchange rate as a bargaining chip to make china make more compromises in areas such as international policy and economy which is opening up the chinese market. do you agree that there there there this u.s.

pressure is is proceeding rather political and economic i would say i would say that is the normal behavior by american authorities just to establish to create pressure on the born and and there we would see it we could see there in the years before person in europe a person person wattle person chapin with a well known players are called to do united states tried to players know the right try to persuade china saying ok look guys look on the wall more globally you have to recognize that it's not only you again not an isolated island you have to take into account all other damosels or other channels of influence what you saying means that americans and europeans think they should teach china heard to be cave in the world they are there maybe you would better troy there try to learn from the chinese because i'm too little for the local is under there they do not want to teach they want to share their experience yet because being the global conflict between the global nation for several decades or was american

administration has. a community a huge international experience understanding hall of the global economy functions chinese unfortunately he even russia even russia i think would have lost total if you listen you know he was isolated from in russia we have more understanding of the global economy how to function in china as well it's it's i would i were you know it would appreciate because any time and i debate with my colleagues from the u.s. administration. because they know more than i know says a director of the macro economic research department at moscow choir school of economics spotlight will be back shortly after a small break we'll continue this interview stay with us.

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welcome back to the spotlight on a mile going over and just to remind my guest in the studio we have today is seventy former russian deputy finance minister former first deputy chairman. of the central bank of russia i remember those days. well thank you thank you for being with us today once again and we just started talking about china we just started talking about about the u.s. and europe trying to share with the cheering that their experience of leading the world economy for a member of the case which i did not because but will china has been around more than a logo than europe has learned there's a lot of what we get if one company was different but it's still it was economy men

haven't changed a lot since. you no no no it's not true that sort of if you look on the wall hughes the reality before nineteenth century you will see is that the g.d.p. per capita was good to stable our less industrial revolution took place in the united kingdom due to people cry but i was born where a very slow and all economies were localized there were natural economies re it was yellow not that i chose it is a huge initial listen or the us federal reserve one of the houses talking to china trying to share their experience while the us federal reserve continues to print billions of dollars pumping them into the economy isn't it is that actually a policy of dollar depreciation while they're voting for appreciation i would say that when you go into the war the american government first of all would like to solve all problems the problem of all nations as well as china as well as russia as

well as british to go in and of course of course it is a great danger for the united states that the economy's facing the double deep economic recovery is not stable is not fast and there are great concerns that unemployment is high and the economy in will we only phase the second decline in the role and of course federal federal reserve would like to help to boost the economy by cheap money. so money for a policy maybe is not the best instrument but is the only one that will mean in the hands of the most of those social you think they're the us will continue the policy are of cheap credit and the price of the dollar will continue to go down of course of course and miss their action will continue this unless all the contras within g twenty i don't know how more you counter should be but china of course we should be one of them they should press us of ministration just agree up all sort of rules of the game because you've missed or find those with a sector of director of the united states tim geithner has signed this declaration

or congress who was of no devaluation there should be sort of commitments on us as well but it starts to backfire i mean i mean more and more countries are starting to cut to country by a little deals using other currencies then dollar avoiding dollars in these bilateral deals and that means that the us is actually by its policy undermining the international position of the dollar as it is i would say it's wishful thinking up to now approximately eighty percent or foreign she's transactions in international markets they have the u.s. dollar on the one side i would like i would like all the world to be more diversified of either fortunately it's not true russian finance minister. is confident that the russian economy is not suffering from a currency war and here's a quote. from the internet remember there is not yet a currency war going on we are talking only about expectations that currency flows

will become more powerful instrument for competition something today the clearest examples are usa in china the situation between them is unique but we can't say that there is a similar war in any other part of the world. russia's central bank has decided to loosen the rubles floating corridor recently would you say that it means that russia. is somehow teched is some are influenced by this conflict by this conflict between the states and china no no i would know what is your agree with alex equal visit russia is the outside of this currency or was because of manufactured products and russian expertise not to be in the us or russia and north by division is clarence russia cannot benefit something of the world market because russia is the natural resources commodities that north affected by the winter you were in charge russia has been very proud of its. current era for the ruble now it's loosing it well at least you know its laws and

because there is a pressure in the current account russian you propose drawing with the speed of more than thirty percent year to year while the sport is stable and that of course great suppression of the bones of payments starts started to sell their fortunes reserves what you did mean loosening of the corridor will ruble start falling or rather rising over soon a suitable way forward fallen will be falling in the not fast not continuously but the general trend for the coming years he's a loon of the all so what should be my preference in the currency where my salary here is in roubles so the ruble will be falling you say so what should i do what should i buy dollars pounds a year and another line i would have thought the first of all you should not change your strategic everybody even if you could talk about savings if you talk about saving decide what is what is the purpose of your savings in just ordinary expenditures then the problems because you live in russia and you need rules for current expenses if you plan to wife i don't know how. long does your how you know

you have a will is ruble starts falling people say what should i do what should i do with a one once again it's not a continuous process and that doesn't mean that all bill will lose i don't know two three five or six every day one datable may lose another will may gain well let's see which currency do russians trust the most spotlighted sky. on the other has tried to fight that. they're all in the global financial crisis many experts have been changing their mind about the world's leading currency some of the gold my big one today i'll try to find out which currency did people in this country trust the most euro dollar. i trust the russian ruble because i live in this country you trust because it is a united european currency and i think it is more stable than others i think i think that there's definitely opportunity for growth in russia. i think that the

demand for that currency will be strong as the country continues with a trustee and the most because japan has the strongest economy there's nothing better than you and. i trust the russian ruble the mongst i think that are the currency is a very shaky russia is the wealthiest country and that's the reason why i trust. rubles of course i live in russia and i think that our currency is very reliable and trustworthy. so do you think this trust in the ruble is justified yes yes i think that any country of the world you should assume because that is the country where you live and that's economy where you. can and the wealth you are benefiting so national congress is you should be proud of it but what are the russians you just mentioned why the russian soaps ists by trying to analyze what is the best currency for their savings it's not because any other country in the world i

think. we together we remember the soviet union here will remember empty shelves in the shops and the remember the total cost and you know years enough after the war the remember the devaluation of the old and the beginning of the ninety's in ninety eight and all fall and they so russian russian ruble has no long history. and the only reason all have their savings in dollars they they managed to save something at least they may well here in wales as well because each year families of dollars let's say somewhere in two thousand and three by two thousand and eight you have lost approximately twenty percent ok now listen in two thousand and ten according to the press russia's exports slow down while the imports keep on rising and they still keep rising is that a sign that the ruble is too expensive from the point of view of russian producers that this is one of the explanation of this for us because russian russian

producers they should compete not in international markets but in domestic market with chinese products for example and i'm with a lot of companies of from oil industry for example gas industry who said ok it's cheaper for us to y. chinese products rather than russian because they're cheaper than using visa paired to you door and that's why the prices are stable while all these it was appreciate and seen since march of two thousand and nine ok now if currencies will be devalued eighteen years and they're including the ruble going to go down maybe slightly but it will what's going to go up. the paper shares are stronger you know i guess i don't i think i think if all carless will go down means that all the world will be in high inflation high for years and that will be a the best scenario for a new one i believe that it's in the more dangerous situation of this why ministers

of one is try to avoid this situation because if any counties depreciate in that music have to address this in your local economy by high inflation. even this happens of course some goods like gold gold will be for the best value here we come back to jury service yeah if inflation is high please buy gold. you have no choice but but many people say this. is what sars has been driving at since the start of this thing around gold yes yes yes about ok easy for me if u.s. is printing cash is the european central bank is printing gashes russian central bank printing cash like a certain port that's will grow in value and usually to find some limited products with a limited supply what kind of the world's have you guys feel that one that me. do we get a lot of man like jewelry sardis is able to. do you know one person can when you

believe the world no. thank you thank you very much for being with us just a reminder that. was my guest today a financial analyst and a former russian deputy finance minister and that's it for now from all of us here spotlight we'll be back with more first time comments on what's going on in and outside russia until then stay in r.t.e. and take care of things like. i said. more news today violence is once again flared up. these are the images the world

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