By Clancy Yeates
TREASURER Wayne Swan has urged world political leaders to resist protectionist policies and pressed the case for currency reform, in a bid to keep the fragile global economic recovery on track.
Amid growing fears of ''currency wars'', the Treasurer said leaders had so far avoided ''poor policy choices'' that would encourage growth in one country at the expense of another in the aftermath of the financial crisis.
In a speech to the New York Stock Exchange, he said these lessons should be kept in mind as the world grappled with new economic challenges.
After attending meetings of the International Monetary Fund and the World Bank, Mr Swan called on leaders to harness the goodwill of recent years, when most countries kept markets open despite the dire outlook. ''Our collective efforts saved millions of jobs, and brought the global economy back from the brink,'' he said.
''The challenges we now face require the same degree of collective action, of goodwill, and political courage.''
The Treasurer also weighed in to the growing debate over exchange rate policies - which more countries are using to give their exporters a leg-up over foreign rivals.
After the IMF meeting at the weekend failed to resolve the worsening rift between the US and China over currencies, Mr Swan said: ''we also have to show that we are capable of dealing with the structural reforms that lift growth across all countries, not just shift it between countries. Currency reform is an important element of this reform agenda, but it is not the only issue.''
China stands accused over undervaluing the yuan to help its exporters, and the US is set to retaliate through trade sanctions.
Economists fear that if these tensions worsen, world growth could be stifled by a wave of trade restrictions.
In stark contrast to the economic gloom in much of the developed world, Mr Swan outlined an upbeat view on the ''Asian Century'' that is helping Australia grow.
He compared the rise of Asia to the emergence of the US as an economic super power early last century, and said the government's economic policies were designed to make Australia a more attractive destination for foreign investors.
The Treasurer's address comes two years after his first visit to the NYSX, in October 2008, when the global financial meltdown was at its peak.
''I remember standing on the trading floor on the day the Dow fell by 7 per cent, the biggest single day's drop since the stockmarket crash of 1987. And I'll never forget, two days later, seeing the fear in the eyes of my G20 colleagues as I looked around that conference room in Washington DC,'' he said. ''The global economy was teetering on the edge of a cliff, but common need - and commonsense - prevailed.''