HIGHLIGHTS-Comments from officials at G7, IMF meetings

ISTANBUL Oct 4 (Reuters) - The following are comments on Sunday from finance officials in Istanbul for the Group of Seven, IMF and World Bank meetings. > For top stories, please double click on [G7/G8]

ECB GOVERNING COUNCIL MEMBER CHRISTIAN NOYER

ON NON CONVENTIONAL MEASURES:

"There is no question today of withdrawing the non-conventional measures but certain meaures may become less useful as the market takes their place."

ON POTENTIAL GROWTH:

"The general feeling is that potential growth probably fell temporarily because there was a drop in investment and so capital will have aged and the increase in unemployment will force us to make more efforts on training when the workers return to the jobs market.

"So it is possible that we will have potential growth that is a bit weaker. But that said, because we have an output gap that built up during the recession, we could in theory have a catch up period of growth in the next years."

BANK OF CANADA GOVERNOR MARK CARNEY, ON THE FUTURE OF G7

Asked if the G7 could still be effective if it became more informal and did not issue communiques:

"We have the phone numbers of all these people, we see each other. The G7 is not an accidental grouping. For all the noise, these are the most advanced economies, the most advanced financial systems so for a core number of issues they impinge particularly on the G7."

"In the end it's the ability to sit around the table, be absolutely frank, focus on the relative issues at hand, not have an agenda that is overladen, expanded, an emphasis on informality, only say something when it's really important, communiques when there is something significant."

"And very much a real commitment that there are things in the G20 agenda for which the G7 has a particular responsibility (such as) over-the-counter derivative markets. There was clear agreement that we need to address these issues."

ON G7'S FOREX LANGUAGE:

"There wasn't a heated discussion on the issue and so there was unanimity that this was appropriate."

"Maybe one could generalize a bit from that one major emerging market (China) to other emerging markets, but it's the most dramatic and important example."

"In terms of the relative valuation of the Renminbi, yes it is substantially undervalued."

"The U.S. dollar has adjusted substantially against our currency and against other major currencies. There are some major currencies, major trading partners of the U.S. against which it has not adjusted. The G7 statement recognizes that."

WOUTER BOS, DUTCH FINANCE MINISTER ON WORLD ECONOMY

"Everyone is very cautious about the economic recovery that is taking place at the moment... The risk of a second trough is seen as real possibility ... everyone is agreed that we are not yet out of the recession. We can hope for this in 2011 but nobody knows how it will turn out."

BRAZILIAN FINANCE MINISTER GUIDO MANTEGA ON IMF REFORM:

"This new international economic architecture has the G20 at the top of the pyramid, providing guidance and support to international financial institutions. Among these institutions, the IMF may become the most crucial one -- but this will only happen if the fund proves capable of reinventing itself."

"Over-represented developed countries are reluctant to accept these changes ... We can only hope that over-represented advanced countries will realize that they may do great harm to the fund if they attempt to block or delay quota and voice reform."

FRENCH FINANCE MINISTER CHRISTINE LAGARDE:

LAGARDE ON CHINA'S PRESENTATION TO IMF STEERING COMMITTEE:

"What really hit me was the change of speech, and I suppose of economic policy of China. It was the first time I heard the Chinese both reiterate growth forecasts of 8 percent in 2009 and 2010 and reiterate on several occasion that it was human and social development that (they want) to have at the heart of China's economic policy by speaking very specifically on a number of subjects -- social security, pensions, supporting consumption, infrastructure and development of internal economic policies that correspond to calls to rectify imbalances.

"It was really concrete and precise."

These policies "will probably have an impact on exchange."

"What I want is that the economic policies that have been mentioned by China, are carried out. That seems indispensable if we want to rebalance."

LAGARDE ON EXIT STRATEGIES:

"The start of the withdrawal will be the moment when we feel that private investment is ready to take over from public investment."

LAGARDE ON COMMODITIES:

"I do not want the exit from the financial crisis to restart the phenomenon of speculation on financial instruments based on commodities, notably on petrol ... it's a risk that could hurt the potential recovery."

BELGIAN FINANCE MINISTER DIDIER REYNDERS:

"Premature withdrawal of supportive fiscal measures should be avoided as this could harm the recovery. However, rising borrowing costs and crowding out of private investment should be eschewed by adopting credible fiscal adjustment strategies that respond adequately to the upcoming costs of an ageing population in advanced countries."

"In some emerging market countries, the threat of inflation, inter alia because of highly expansionary fiscal policies, requires increased attention. Rigid exchange rate arrangements could pose a threat to financial stability in these economies."

SWISS FINANCE MINISTER HANS-RUDOLF MERZ:

"A well-timed exit from loose monetary conditions and unconventional monetary policies is important for containing the build-up of excessive inflationary pressure. High fiscal deficits and the increase in public debt levels in many advanced economies call for the formulation of credible strategies for safeguarding long-term fiscal sustainability."

"I strongly favor terminating public involvement in the financial sector as soon as market conditions permit."

EU ECONOMIC AND MONETARY AFFAIRS COMMISSIONER JOAQUIN ALMUNIA:

"With increasing signs of stabilisation of the global economy, exchange rate volatility and risk aversion have decreased over recent months ... Going forward, risks of excess volatility and disorderly movements in exchange rates should be avoided in view of their adverse implications for economic and financial stability. Increased exchange rate flexibility in some major trading countries would contribute to such an orderly process."

"Euro area HICP inflation has reversed its downward trend and should return back to positive territory in the coming months, in line with expectations, as the base effects stemming from past energy price developments have changed sign and the economy gradually recovers. At the same time, inflation expectations have remained well anchored in line with the ECB's objective of price stability."

U.S. TREASURY SECRETARY TIMOTHY GEITHNER

GEITHNER ON DEADLINES FOR NEW CAPITAL STANDARDS:

"The United States is committed to specific deadlines for implementation of more and higher quality capital, stronger liquidity, a simple leverage ratio to constrain excess risk-taking and building buffers that firms can draw down in periods of stress."

GEITHNER ON IMF CURRENCY SURVEILLANCE ROLE:

"Greater transparency is critical to underpin the credibility and effectiveness of IMF surveillance. Since the crisis has taught us that no nation is immune, we call upon all IMF members to allow the publication of their annual Article IV reviews."

GEITHNER ON IMF QUOTA REFORM:

"In Pittsburgh ... G20 Leaders committed to a shift in IMF quota share to dynamic emerging market and developing countries of at least 5 percent from over-represented to under-represented countries. Attention must now shift to implementing this agreement, and we call on the IMF to facilitate this process by providing scenarios of how the quota shift could be implemented in the very near term."

EUROPEAN CENTRAL BANK EXECUTIVE BOARD MEMBER LORENZO BINI SMAGHI ON FINANCIAL REGULATION:

"Nobody wanted the regulators to implement the regulation (before the crisis), everything was done by the industry, by political authorities. The regulators were abandoned.

"We need more independent regulators, more independent supervisors, so we are able to resist the pressure of the industry, resist the pressure of the politicians, but I don't see that. It's exactly the opposite. If you look at the discussion in Congress and so forth, you don't see a trend to make supervisors more independent, particularly with the central banks."

SOUTH KOREAN FINANCE MINISTER YOON JEUNG-HYUN ON REBALANCING:

"A large part of this adjustment must come from within Asia through policies that will promote a reduction in both corporate and household savings rates, promoting a shift in production to non-tradable sectors and supported by greater exchange rate flexibility. Equally, major current account deficit countries need to articulate credible strategies for achieving fiscal consolidation over the medium term and embark on productivity-enhancing structural reforms." (Editing by Ruth Pitchford and Tim Ahmann)