Finance officials comments at IMF meetings

WASHINGTON (Reuters) - Financial officials from around the world are in Washington this weekend for the International Monetary Fund and World Bank fall meetings.

On Friday, top officials from the Group of Seven rich nations promised exceptional and urgent steps to deal with the global financial crisis.

Below are key quotes from officials on Saturday:

CHRISTINE LAGARDE, French economy minister, speaking to reporters about interbank lending guarantees:

"Guarantees, whether they relate to certain loans, certain debt issues, certain interbank loans or deposits, have multiple dimensions and we have to examine them on a case-by-case basis to see whether they have a distortionary character."

"We committed ourselves, in both the G7 statement and the conclusion of the Ecofin, to ensuring that any measure taken by a member state should take care to avoid distortionary effects in other member states."

DOMINIQUE STRAUSS-KAHN, IMF managing director, at a news conference :

"In the coming days ... what I expect is that the reaction by the different institutions will be positive enough to unfreeze the different markets and to restore the necessary funding."

"The crisis is not only a crisis limited to advanced countries, but it also hit a lot of emerging countries, low income. And so we (the IMF) need to be ready to answer and we are already answering to many countries asking for support. To do that we have a lot of resources that are available...we're ready to help the country that needs some support."

YOUSSEF BOUTROS-GHALI, chairman, IMF steering committee, at a news conference:

"We are all committed to the (G7) plan of action ... this is an essential element for restoring confidence."

"We are committed to resolving this crisis ... that is not a small achievement."

"I am sure from the discussions there will be a number of measures that will be in the coming days coming forward."

IMF steering committee communique:

"The committee recognizes that the depth and systemic nature of the crisis call for exceptional vigilance, coordination, and readiness to take bold action. It underscores that the fund has a critical mandate to foster the multilateral cooperation needed to restore and safeguard international monetary and financial stability. The committee considers that, using its emergency procedures, the fund stands ready to quickly make available substantial resources to help member countries cover financing needs."

GUIDO MANTEGA, Brazil finance minister, addressing IMF steering committee:

"The world watches in disbelief as the unfolding crisis reveals serious systemic weaknesses and policy blunders in what used to be regarded as model countries, countries that were presented as references of good governance, as examples to be imitated.

"The IMF itself used to take these countries' financial systems as the basis for devising so-called best practices in terms of financial management.

"After the current turbulence is controlled, we will have to establish a new set of practices to strengthen and protect the financial system, but without a bias toward the practices of the advanced countries."

GIULIO TREMONTI, Italian economy minister, on expanding the G7 and reforming market regulation

"We propose to go beyond the G7 framework to adopt a larger structure," he said. He did not suggest which or how many new countries should enter the exclusive rich nations group, saying that for now he was calling it the GX.

The rewriting of financial market rules should target "absolutely crazy bodies, like hedge funds which have nothing to do with capitalism."

MIGUEL ANGEL FERNANDEZ ORDONEZ, European Central Bank Governing Council member, in an interview.

"I think central banks, and especially the ECB, which does not have any responsibility in (market) supervision, do not have anything to do. Until now, the provision of liquidity and interest rate levels has been important," he said.

"Now all that people here work for is something that is in the hands of treasuries and (market) supervisors and that is how to recover confidence. That is crucial at this moment," he said.

TITO MBOWENI, South African Reserve Bank, to the IMF steering committee:

"We all saw the dangers building up over the last few years, and knew the actions we needed to take to avoid a calamitous outcome. But this common knowledge was not enough to spur determined corrective action."

"We were not able to act in unison, and the institutions tasked with facilitating a collective could not or were not allowed to realize their mandate. We must now acknowledge this profound failure."

YI GANG, central bank deputy governor of China, said in a statement

"The emerging market economies have maintained robust growth but the deteriorating external environment is putting the resilience of their macroeconomic policies to the test."

"In line with their status, the major reserve currency issuing countries should shoulder the responsibility for preventing further spillovers and minimizing shocks to other economies -- especially to the emerging markets."

"Substantial progress has been seen in reform of the RMB exchange rate regime, with increased exchange rate flexibility and the currency moving closer to equilibrium."

"The fundamentals of China's economy have not changed and, as envisaged, macroeconomic adjustments are beginning to work. Despite the negative shocks of the financial crisis, China will accelerate transformation of the growth model, promote domestic demand -- especially household consumption -- and maintain fast and stable growth."

GUIDO MANTEGA, finance minister, Brazil, to reporters:

"Emerging countries were initially being less affected by the crisis but, now that the crisis becomes more acute, those countries are more affected. When there is no liquidity, investment funds begin to withdraw money from all places to fill in the gaps they have in the U.S. and in Europe."

"So now you really have negative balance of payments in several countries. It is not the case of Brazil, because our balance of payments remains positive, but there are some 30 emerging countries with negative currency flows, and this is going to hurt their growth."

"Today emerging countries account for 75 percent of the world's growth. If we manage to reduce the damages from this crisis, we will have the strength and the conditions to lead global growth, in a counter-cyclical action."

HENRY PAULSON, U.S. Treasury secretary, to the IMF steering committee:

"Emerging market countries have made impressive strides in strengthening fundamentals, enabling their economic growth to accelerate and their economies to be better cushioned against external shocks."

"Nevertheless, emerging markets are not immune from the global financial stress, and policy makers need to be especially attentive to implementing measures to support noninflationary growth, enhance economic resilience, and ensure sound financial systems."

DOMINIQUE STRAUSS-KAHN, IMF managing director, in speech to IMF steering committee:

"The measures (taken so far) have not yet achieved the goal of stabilizing markets and bolstering confidence. Thus, additional moves will likely be needed in the coming months."

"Restoring confidence now requires a decisive commitment to concerted and coordinated action to facilitate timely recognition of troubled assets and bank recapitalization,"

OPEC statement to the IMF steering committee:

"The overall bearish sentiment in the (oil) market is expected to persist, particularly since there seems to be no quick end to the current financial market crisis or the worsening economic outlook."

JOAQUIN ALMUNIA, EU economic and monetary affairs commissioner, in a statement:

"Supported by the easing of commodity prices, the presently high inflation is on a downward trend and long-term inflation expectations are stabilizing at a lower level consistent with price stability."

"If confirmed, these new developments could justify some monetary easing in the near-term."

MARIO DRAGHI, head of the Financial Stability Forum and also Bank of Italy governor, about measures proposed by the forum:

"All these recommendations are structural and medium term in their nature. If we fully implement them the system will be more robust in the future."

"We need to work together in a co-ordinated way going forwards...We are in the first stages of an emergency response."

JIM FLAHERTY, Canadian finance minister, to reporters:

"There has been a lot of volatility and no one really knows how markets are going to react. But the G7 plan should at least show to markets on Monday that leaders are committed to contain the crisis."

Speaking about G7 talks, he said: "We've discussed banking measures adopted in countries such as the U.K. and Germany. But one has to keep in mind that each banking system is different."

"There's no need to increase deposit insurance in Canada. Our banking system is sound. I also don't think that this is the time (for the government) to overspend, cut taxes. We have to keep the course steady."

U.S. PRESIDENT GEORGE W. BUSH, after meeting with G7 finance officials:

"These extraordinary efforts are being implemented as quickly and as effectively as possible. The benefits will not be realized overnight. But as these actions take effect, they will help restore stability to our markets and confidence to our financial institutions.

"I'm pleased that other G7 countries are making strong -- are taking strong measures. Finance ministers and central bankers have acted to provide new liquidity to markets, strengthen financial institutions, protect citizens' savings, and ensure fairness and integrity in the financial markets."

(Washington newsroom; +1-202-898-8310))