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The world's biggest banking group is calling on the Group of 20 to recapture the "spirit" of co-operation on economic policy that existed at the height of the financial crisis, or risk choking the global recovery with uncertainty.
The current phase of the recovery from the Great Recession is "worrisome," and characterized by a lack of co-ordination, Charles Dallara, managing director of the Institute of International Finance (IIF), told a news conference in Washington on Monday.
On behalf of an organization that represents more than 420 banks, Mr. Dallara called on a core group of the world's biggest economies to begin restoring confidence by coming up with an "understanding" on foreign-exchange rate policies.
That understanding should take the form of an "advanced version" of the so-called Plaza Accord, the pact struck 25 years ago by the United States, Japan, Germany, Great Britain, France to co-operate to lower the value of the U.S. dollar.
The IIF's call for another attempt at co-ordination on foreign-exchange rates comes as a growing number of countries intervene unilaterally in markets to weaken their own currencies. Brazil's finance minister last week said the world is in a "currency war."
The subject of currencies promises to figure prominently this week as finance ministers and central bankers make their way to Washington for the annual meetings of the International Monetary Fund and the World Bank at the end of the week and into the weekend.
Last week, Finance Minister Jim Flaherty said that currencies are a concern of the Group of Seven countries and that he would convene a meeting of this week in Washington of the Group of Seven (Canada, the U.S., Japan, Germany, Britain, France and Italy).
Mr. Dallara, who helped negotiate the Plaza Accord as a senior adviser to former U.S. treasury secretary James Baker, said officials from the United States, China, Japan, and the euro zone should meet to hammer out an agreement on currencies. Other big economies, such as Brazil and Canada, could be brought in later, Mr. Dallara said. The G20 Summit next month in Seoul could proved the "capstone."
The point, Mr. Dallara said, is that time is of the essence. "It's not clear to me that the global authorities realize how fragile the global recovery is today."