hat-tip of the day to whoever told this porky of the Daily Mail which they have fallen for) a very sketchy agreement on what to do with the World's currencies is being hammered out.
I doubt it is going to lead to very much as the G20 is a nice global talking shop.
However, when it comes to managing trade imbalances Germany is backing China. Both these countries follow mercantilist policies of boosting exports and restraining domestic demand. This helps to foster the deficits with the US and UK. Clearly in a free market system the exchange rates of countries would adjust to correct the imbalances. China and Germany would get richer compared to the US and UK, who would now be able to export more as their labour costs had relatively declined.
But China and Germany don't play this game. China holds the Yuan at a pegged rate to the dollar, costing it internal overpsend but hollowing out the USA. Germany is in the Euro and poorer Euro countries help to reign in the strength of the currency where the D-Mark once soared.
In response the US has gone for Quantitative Easing - they have every reason too despite it being a dangerous gamble.
Today though reading the reports, Germany has not backed China in resisting a real cap on trade imbalances and trying to rebalance the world. The UK is onside with the USA. German politicians are also criticising Ireland and Greece for their poor deficit positions; partly caused by the Euro having interest rates set for Germany and it is also having the effect of weakening the Euro, which helps German exports globally.
In times of stress you learn who your friends really are; Die Deutschen spielen schmutzig