German Finance Minister Schaeuble backs London as strong financial centre

German Chancellor Angela Merkel

German Chancellor Angela Merkel

As the gap widens between the rich and the poor, nationalism, populism and protectionism will find fertile ground and pose a risk to prosperity, Schaeuble told a conference, responding in part to an increasingly protectionist stance from the new US administration.

"Our desire is that... when there is imbalances in trading relationships that we have a need to address that", Mnuchin said.

"I had a very good impression of my meeting with him yesterday", Schaeuble added, shortly after speaking with the U.S. Treasury Secretary at a G20 event in the spa town of Baden-Baden in Germany.

But when asked whether the Group of 20 finance ministers should explicitly reaffirm their past vow to resist protectionism, Mnuchin repeated his view that some US trade relationships need to be re-examined to make them fairer and more reciprocal.

Schaeuble told Reuters in an interview that it was unclear whether the anti-protectionism language would remain in the G20 statement to be issued at the meeting's close on Saturday.

Currency topics seem inevitable as Trump's trade policy adviser Peter Navarro once accused Europe, China and Japan of deliberately devaluing their currencies to take advantage over their U.S. competitors.

Yet the British vote past year to leave the European Union and Trump's victory on an "America First" platform have underlined discontent with globalization, a sense among many that the benefits of a globalized economy - that is, with fewer barriers to trade and business - do not reach enough people.

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Germany, which hosts the G20 presidency this year, was rebuffed in its attempts to forge a compromise on the wording of a statement about the global economy that reflects the rules-led system under the World Trade Organization, and the focus on "fairness" that the new US spirit has brought with it.

The G-20 meeting is taking place with the global economy in relatively good shape: the International Monetary Fund predicts growth of 3.4 percent this year and 3.6 percent next year, compared with 3.1 percent last year.

In a sign of cooler heads, Schauble called Mnuchin's comments a "very good message" and said he is looking forward to a productive summit with other G20 finance ministers.

Mnuchin said the ministers agreed that they should fight currency manipulation.

"It is different than a single currency controlled by a single country", Mnuchin said of the euro.

European countries and others that depend on exports, such as China, were said to be pushing for a stronger statement in favor of trade with fewer tariffs and other barriers in a rule-based system. The Fed has raised its benchmark interest rates three times in the a year ago, signaling strength in the USA economy, and improving the dollar's trading value against foreign currencies.

"I believe that in the long-term best interests, the strengthening of the dollar is a good thing and I think that the long term strengthening of the dollar is a sign of confidence in the reserve currency", he said.