Russia's President Vladimir Putin on Friday called on financial chiefs of the world's leading industrial and developing nations to consider the political and social implications of their crucial policy decisions.
Putin was hosting financial ministers and heads of central banks of the G20 group of nations ahead of their key meeting this weekend.
The Russian President told the gathering that financial authorities around the world should be aware of the political consequences as well as social implications on "various groups of the society" that many financial decisions lead to.
"I urge you to consider not only what is necessary in the (financial) terms but also think about what is actually feasible in the circumstances of our life and in each of our countries as well as in the economy at large," Putin said.
Governments across Europe have introduced harsh austerity measures in an attempt to control their debts. This has had a damping effect on the countries' economies, leading to mass unemployment and broad public resistance.
The much-anticipated G20 meeting this Saturday is also expected to discuss the implications of countries using their currencies as an economic weapon.
Markets have been concerned recently by developments affecting the Japanese yen, which now trades near a three-year low. Japan is facing charges that it is trying first and foremost to lower the value of the yen to stimulate its economy and get the edge over other countries. The country's new government has recently set in motion several economic measures it hopes will kick-start its economy, including pushing the Bank of Japan to accept a higher inflation target. This has triggered speculation the bank will create more money, thereby lowering its exchange rate.
If too many countries try to weaken their currencies for economic gain — sparking a so-called "currency war" — then the fragile global economic recovery could be derailed.
U.S. Treasury Under Secretary Lael Brainard on Friday warned the world's biggest economies against taking unilateral steps when it comes to exchange rates.
"All the members of G20 need to deliver on a commitment to move towards a market-determined exchange rate and refrain from competitive devaluation," she said in a speech at a financial conference. "For the adjustment process to work globally, G20 members will have to bring their exchange rate frameworks into alignment so that we grow together and avoid a downward spiral of beggar-thy-neighbor policies,"
Brainard also warned about "loose talk about currencies". When pressed by reporters whether she may have meant Japan, the U.S. officials said that she is not "singling out a particular country."
Christine Lagarde, chief of the International Monetary Fund, dismissed the possibility of an international currency conflict, saying that "the current talk of currency war is overblown."
IMF assessment "does not indicate any major deviation from the fair value of major currencies," she said.
G20 finance ministers and heads of central banks are expected to issue a communique on Saturday, stating their shared view on the global economy. However, several analysts don't expect Japan's recent measures to be singled out in the final statement, with several doubting that exchange rates will be mentioned at all.
Russia's Finance Minister Anton Siluanov, however, expressed hope that the communique would contain a commitment to refrain from competitive devaluation.
Russia used the start of the G-20 meeting to renew its push for a review of the make-up of the IMF and the relative voting strength of its members to reflect growing changes in world economy.
Although the IMF has committed itself to the review, Siluanov said on Friday that he sees "certain difficulties with finding common ground on the road map to solve this issue."
He expressed hope, however, that the financial chiefs will be able to come to a decision at one of the upcoming gatherings of financial ministers before a G20 summit in September.