Brazilian Finance Minister Guido Mantega touted the voice developing nations had in the G20 process and getting the Chinese delegation to change its mind.
But he was hit with tough questions about the G20 process and whether it made any real difference to the world economy.
In a press conference after the G20 issued its final communiqué, Mantega said the Seoul Action Plan section was largely suggested by Brazil, and was a step towards establishing a framework for preventing too much volatility in exchange rates.
The Seoul Action Plan calls for moving towards more market-driven exchange rates and more flexible currency regimes, boosting global demand, strengthening cooperation between countries and modernizing the International Monetary Fund. The Plan formalizes approval of the Basel III bank capital rules and resisting protectionist measures.
It also says that G20 member nations will commit to achieving the Millennium Development Goals, primarily by building better infrastructure in poorer nations.
Mantega said the Chinese delegation did not want to include language that commits the G20 members to pursue policies to redress imbalances, but they were eventually convinced.
One area of contention was capital flows. While the G20 had, up to now, touted the importance of dismantling capital controls, several member nations have begun instituting stricter controls over capital flows both in and out of the country.
Strong flows into countries such as Brazil and Australia can create bubbles, Mantega said. We agreed that countries with emerging economies can take steps to mitigate that.
Mantega also noted that the approval of the Basel III rules took a lot less time than Basel II. The latter took a decade to be implemented, whereas Basel III took only two years.
Since G20 members can still take steps to control capital flows, Mantega was asked what practical difference the G20 Summit made - especially if the United States or China decided not to go along with the framework for exchange rates.
The Chinese government made no commitment to alter its currency policy and allow the yuan to appreciate. Fears of capital controls drove the South Korean Won down 1.8 percent against the dollar between Thursday and Friday, its biggest loss in five months. The U.S. Treasury, meanwhile, announced it would purchase $600 billion of bonds to stimulate the economy as part of an easing policy.
It's a commitment to be accountable to your colleagues, Mantega said. He added that the U.S. Treasury's easing policy was not aimed at a competitive devaluation of the dollar. It's not explicit how each country should stimulate demand. I would use fiscal tools.
Countries that do nothing between now and the next G20 meeting, will have to explain why, Mantega said.
One of the ways the G20 commitments will be enforced will be via the International Monetary Fund. It isn't yet clear how it will detect currency manipulation. Mantega said that hasn't been firmly decided yet, but there are several indicators it could use.
The G20 also created a much more explicit way of reducing volatility in exchange rates, by preventing governments from blocking foreign capital from entering the country or aggressively devaluing their currencies.
It is better to have that than having everybody trying to neutralize each other, Mantega said.
While this was not as concrete or as far-reaching an agreement as some might want, there have been concrete accomplishments, Mantega said, and the G20 communiqué reflects real changes in the shape of the world economy -- to the benefit of developing nations.
If you told me years ago that Brazil and China would have a role in the IMF, I would have said that wasn't possible, he said.