CNB violates G-20 doctrine

The G-20 countries, represented by finance ministers and central bankers, met over the weekend and pledged to avoid competitive devaluations and to resist all forms of protectionism. They reiterated their commitment to move toward more market-determined exchange-rate systems and exchange-rate flexibility, to reflect underlying fundamentals and avoid persistent exchange-rate misalignments. The CNB has been engaging in a competitive devaluation since Nov. 7, 2013, although it refuses to call it that. The CNB is a small player but is one of the world's largest currency manipulators in percentage terms. The crown is about 10% weaker than it would be without intervention. True, the CR isn't a G-20 member, but the EU is, and Czech central bankers can't pretend to operate outside the global economic system. They need to let the cabinet worry now about growth and job-creation, just as called for in the G-20 pledge.