David Prosser: The currency war that no one really wants to talk about

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Outlook So much for international co-operation. The G20 has already given up its attempts to agree a unified approach to the taxation of banks in the wake of the financial crisis. Now it is refusing to discuss the huge imbalances in the global economy that made that crisis possible in the first place.

Guido Mantega, the finance minister of Brazil, says "an international currency war" has broken out. It is what other policymakers have been talking about privately, but the outbreak of candour is not taking us any nearer to a discussion of the solutions.

It's no surprise governments are keen for their currencies to fall in value: it makes it easier for them to export, a handy source of growth as the global economic recovery stutters forward. However, Mr Mantega rightly points out what is happening around the world: governments in countries as far flung as Japan and Switzerland have been intervening in foreign exchange markets in an attempt to manage down the value of their currencies. In all, countries representing two-thirds of the global economy have been pursuing some form of depreciation strategy.

Will this be the number onetopic at the next G20 meeting in South Korea in November? Not if the Koreans have anything to do with it. They've been intervening in the markets themselves, but, more significantly, they're also concerned about upsetting their neighbours in China, the biggest currency manipulator of all.

For Tim Geithner, the US Treasury Secretary, the issue is becoming ever more difficult. Under pressure at home from American politicians representing exporters unable to compete with their rivals in China because of the artificially low value of the renminbi, MrGeithner's pleas to Beijing to let its currency float more freely have largely fallen on deaf ears. An international effort might have been more effective, but it's tricky to assemble such an alliance when so many countries are copying China's lead. It's every country for itself out there right now.

Why does this matter? Well, Mervyn King, the Governor of the Bank of England, believes the financial crisis was an inevitable consequence of the vast export surpluses built up in China and elsewhere in Asia – excess cash that was reinvested in the public and private sector deficits of the West, inflating our credit bubble.

"Adding inexorably to the stock of international assets and liabilities is like adding one brick on top of another to form a tower," Mr King said this year. "With skill, it can be done for a surprisingly long time, but the moment comes when adding one more causes the tower to fall." A pity, then, that we are rebuilding the tower.