Mike Callaghan is Director of the Lowy Institute's G20 Studies Centre. 

On the eve of the G20 Finance Ministers' meeting in Moscow on 15-16 February, Moises Nain commented in the Financial Times that he had given up on the G20. The problem, as he sees it, is the diversity of interests: 'when all these disparate and often conflicting interests need to be incorporated into an agreement, the resulting solutions fall short'. Nain's solution is 'minilateralism', a gathering of the smallest number of countries necessary to make a major change on a particular issue, such as the ten largest polluters or the twenty largest consumers of endangered fish stocks.

When it comes to addressing the challenges confronting the global economy, the G20 is already an example of minilateralism, involving the world's most systemically important countries. There are arguments over whether all in the G20 meet this criterion, but it is essential that there be a forum including the largest advanced countries and major emerging markets.

The diversity of the G20's membership is a reflection of the changing global landscape and the growth of emerging markets. Reaching agreement in the G20 is harder than in the more 'like-minded' G7, but the agreements are more meaningful. Fen Osler Hampson and Paul Heinbecker refer to the offsetting advantages of the G20 'in terms of the breadth of support behind any agreement that is reached and the capacity of the group to deliver on it'.

But the focus should be on the commonality of interest among G20 members rather than their diversity.

There was a common sense of purpose at the G20 leaders' meetings in November 2008 and April 2009 on the need to respond to the global financial crisis. The varying pace of recovery across countries has taken its toll on consensus-building and efforts at policy cooperation. But as Augustin Carstens, Mexico's central bank governor, reminded finance ministers in Moscow last week, the G20 has to regain its common purpose and remember that we live in an interconnected world.

This has been no more evident than in the need to deal with so-called currency wars. The focus has been on the language in the G20 Finance Ministers' Statement from their Moscow meeting. The commitment to move 'more rapidly to market determined exchange rates' and to 'refrain from competitive devaluations' is welcome, although may disappoint some in the markets.

But the words in a ministerial communiqué are one thing. As we saw with the G7 statement on exchange rates, what ministers and officials say in 'interpreting' the communiqué can readily undermine its impact, and lead to greater confusion. What is more important is what countries do. And in this regard, it is to be hoped that the main benefit from the recent meeting of G20 finance ministers was a comprehensive discussion of the dangers of currency wars and the dangers of retaliatory action through protectionist measures.

On this point, it is encouraging to hear from Canada's Finance Minister Jim Flaherty that 'the mood quite clearly early on was that we needed desperately to avoid protectionist pressures', and that mood permeated quite quickly. It is to be hoped that all took heed of Governor Carstens' warning that, notwithstanding diversity of interests and circumstances, we still live in an integrated world.

We need the G20. So rather than giving up, we should all be aiming to make it work better.

Photo by Flickr user Nicola Corboy.