At the G20 pre-meeting last week the world's economic powers discussed the skeleton of a plan which could ultimately guide everything from nations' domestic open market operations to much broader trade interactions between states. Brokered by US Treasury Secretary Tim Geithner, the plan faced an uphill battle with the likes of Germany and China among those initially voicing concerns. There was also broad-based caution over an agreement which lists among its somewhat aspirational but potentially massively impactful goals such concepts as evening out excessive trade imbalances and guarding against excessive currency volatility. It further hands the responsibility for monitoring these goals to the oft-maligned IMF.
However, despite Geithner's ability to overcome the initial concerns of some of the parties, hurdles remain. For example, there is the small matter of there not being an agreed upon global measure of 'imbalances.' For as often as the concept is thrown around by politicians, there is actually no great way to define it nor is it clear that imbalances are actually bad. Indeed, they are necessarily a function of growth in at least some economies. Is it correct, or even possible to stifle such market forces? John Cochrane of the Wall St. Journal addresses some of these potentially fatal flaws and more here.
UPDATE: As perhaps anticipated, Geithner's plan is likely to be dead on arrival when the G20 summit commences in Seoul. German and Chinese resistence in the face of US economic policy has put the final nail in the coffin, although what was noted to be a potentially flawed plan above was likely doomed even before statements from the detractors last week.