The US, China, Japan, Saudi Arabia and the euro zone agreed at the weekend to tackle distortions that are threatening the stability of the global economy.
Amid fears of a failure to tackle the imbalances that have left the US with a record trade deficit and the two leading Asian economies with massive trade surpluses, the five leading players in the global economy outlined the action required to prolong the strongest period of growth in almost four decades.
China signalled it was prepared to accept a higher exchange rate, provided it happened in a "gradual and controllable manner", while the US accepted it needed to do more to persuade its citizens to save.
Japan and the euro zone agreed to structural economic reforms, while Saudi Arabia pledged to recycle the proceeds from higher oil prices.
The announcement, at the spring meetings of the International Monetary Fund (IMF), followed a period in which the fund organised multilateral consultations between the five economies.
Until last year, the IMF's surveillance work concentrated on individual countries, but it believes that mutually supportive measures will be necessary to prevent the imbalances from damaging growth prospects.
Hank Paulson, the US treasury secretary, said: "While these consultations were never intended to produce joint policy commitments, they have contributed to improved understanding about the participants' shared responsibilities for promoting adjustment of imbalances."
Mr Paulson added that Europe and Japan needed to expand domestic demand to take the pressure off the US.
"The counterpart to a falling US trade deficit, by definition, is falling trade surpluses in other countries," he said.
British chancellor Gordon Brown, who chairs the main IMF committee, rejected suggestions that countries would fail to implement the proposals.
"I think from the world economy's point of view, it is a major advance that, on a huge issue that has worried policymakers for many years, we have got a process that has worked . . . and [ countries] accept that they have mutual responsibilities."
Mr Brown dismissed concerns about the non-binding nature of the policies, saying it was "the first time that this has happened in this way . . . I think the willingness of the five participants to make commitments about the future is important in itself".
IMF managing director Rodrigo de Rato said the policies would be regularly monitored as part of the IMF's mandate to undertake multilateral surveillance.
Modernising the IMF's surveillance role - by undertaking measures such as monitoring the spillover effects that financial problems in one country can have on another - is part of a reform package intended to rejuvenate the IMF. - ( Guardian/Financial Times service )
