HIGHLIGHTS-Comments from Paris G20 finance ministers meeting

PARIS Feb 19 (Reuters) - Following are highlight quotes from officials at the end of a G20 finance ministers meeting which reached a compromise agreement on imbalance indicators.

FRENCH ECONOMY MINISTER CHRISTINE LAGARGE

ON REACHING SATURDAY'S AGREEMENT:

"It wasn't simple, there were obviously divergent interests, but we were able to reach a comprise on a text that seems to us to be both balanced and demanding in its implementation.

"The negotiations were frank, at times tense and always very respectful... The final compromise shows a spirit of compromise and thoroughness."

"The next step will be the guidelines, then the mutual assessment process... I take things one day at a time. If it is difficult it will be difficult."

ON INDICATORS:

"The reference to the exchange rate and to a lesser extent monetary policy was the aim of a long debate.

"Everyone agrees that the international monetary system will not be reshaped in a day or even in a year." "These are not targets, goals, these are indicators.

"Reserves have been dropped."

ON BANK REGULATION:

"We encouraged all the supplementary work on shadow banking and there the FSB is going to submit a report as soon as possible, by June at the latest."

ON CHINA MONETARY REFORM SEMINAR

"The seminar which will take place next to Shenzhen ... will take place in the last three days of March, (it) will be organised with the ... aid of the Chinese foreign ministry and the central bank of China."

ON TUNISIA AND EGYPT:

"We put ourselves at the disposal of these two countries, in liaison with the regional development banks, to help with the transition in these two countries."

U.S. TREASURY SECRETARY TIMOTHY GEITHNER

ON EUROPEAN DEBT PROBLEMS

"European leaders have made it clear they will do whatever it takes to make sure the nations affected and their banks have access to financing as they implement these very challenging, multi-year programs of fiscal and financial reform.

ON EXCHANGE RATES AND CHINA

"The upward pressure on (emerging market) exchange rates is being accentuated by the fact that other major emerging markets are holding their exchange rates at undervalued levels and tightly limiting capital inflows, which serves to exacerbate price pressures within their own economies and shift the burden of adjustment to others. "There is broad consensus that the major economies, not just Europe, Japan and the United States, but also the large emerging economies need to allow their exchange rates to adjust in response to market forces.

"Since June 2010, China's authorities have allowed their currency to appreciate against the dollar at a pace of about six percent a year in nominal terms, and more than ten percent a year in real terms, given faster inflation in China than in the United States.

"Nonetheless, China's currency remains substantially undervalued, and its real effective exchange rate -- the best measure to judge its currency against all its trading partners -- has not moved much in this latest period of exchange rate reform."

ECB PRESIDENT JEAN-CLAUDE TRICHET

ON INFLATION:

"The price of energy and commodities is something we are looking at very very carefully with a view to avoid second-round effects, to avoid that price increases could be enshrined in inflation in the medium term.

"We are responsible for preserving stability in the medium term. No second-round effect is our moto.

"Inflationary pressures coming from the price of oil, energy and commodities are to be taken seriously.

"We feel it is absolutely decisive that we have the appropriate measures for reducing global imbalances which were one of the causes of the difficulties we have observed in the recent past... The indicators mentioned in the communique are certainly very important."

ON PORTUGAL

"We call on all governments, without any exception, first to apply the plan that they have ... as rigorously, convincingly and ethically as possibly, and they have themselves to be ahead of the curve in all respects. That is our clear message ... for Portugal as well as for others. It is up to the countries themselves to be convincing in making their case to the market."

IMF CHIEF DOMINIQUE STRAUSS-KAHN

ON INCLUDING CHINA'S YUAN IN THE SDR:

"Shouldn't the basket (of currencies behind the SDR) now include other currencies, because the world is no longer the euro zone, the U.S., the UK and Japan, and the answer is yes.

"The question is what are the requirements?

"It has to be a currency which is freely valued by the market and it (the renminbi) is not. The question is how can we have the renminbi in and I would be personally in favour of having the renminbi in as soon as possible, but it means one way or another that the renminbi has to be, if not totally freely convertible, at least partly convertible.

CANADIAN FINANCE MINISTER JIM FLAHERTY:

"There was no indication by China that they intended to be more flexible with respect to their currency immediately. But the indicators are much more broadly based than that.

"This isn't just about exchange rates. This is about growing global imbalances."

BANK OF CANADA GOVERNOR MARK CARNEY

ON SATURDAY'S AGREEMENT:

"The impact of reserves to the current account is very much included, the components, net investment flows particularly, ... are the product of the net foreign asset position of the country and in a country like China effectively the product of their foreign reserve position, so the substance of it is there. It's just wording."

JAPAN FINANCE MINISTER YOSHIHIKO NODA

ON SATURDAY'S AGREEMENT:

"We needed to be inventive about wording in the communique in consideration for a country that did not want to use the term 'current account balance'... The statement lists components of the current account balance.

"Some may point out that exchange rate is not included in the set of economic indicators. But the statement says to take due consideration of exchange rate so it is a de facto inclusion."

BUNDESBANK PRESIDENT AXEL WEBER

ON BASEL III BANKING REFORM:

"The U.S. finance minister has assured the Europeans that we are implementing these rules jointly and symetrically in a global context.

"That affects especially the innovations of rules for the trade-book. Significantly higher capital requirements will be required for risky derivative business in future -- that will be implemented on both sides of the Atlantic in parallel. New capital and liquidity rules are being implemented in tandem.

"We have reassured each other, that these (systemically important) banks will need higher capital-requirements. There is still a discussion about the concrete instruments for that."

"The French approach is first to start with systemically relevant financial institutions and than continue with other financial institutions. The question of capital surcharges is still on the agenda.

"The second thing is: it is not enough to require more capital from the SIFIs. More intense supervision has also to be part of the new regime".

RUSSIAN DEPUTY FINANCE MINISTER DMITRY PANKIN

ON SATURDAY'S AGREEMENT:

"I would not call it a victory for emerging markets. It was a compromise.

"It shows the strong position of China. China had a very hard-edged stance that reserves should not be included. For us it was less crucial.

"The main thing is that ... all countries were ready to compromise.

"It certainly will not be easy in the future, when debate turns to the concrete numbers and implementation."

ITALIAN ECONOMY MINISTER GIULIO TREMONTI

COMMODITY PRICES AND NORTH AFRICA:

"No one spoke out against speculation two years ago but now we are seeing the consequences of this. A few speculators gained a lot, and now a lot of people risk losing everything.

"I am convinced that speculation on soft commodities was the trigger for the unrest in North Africa, even if there are deeper political reasons.

"The European Union should act to help North Africa, it has the right tools to do it, but it has to respect the political systems in place in those countries.

ON PRIVATE DEBT AND THE EURO ZONE:

"If private debt is an important indicator for the G20 it is also important for the EU Stability Pact.

"After this G20 compromise on indicators I think it will be easier to reach a deal in the European Union on the EU Stability Pact and the permanent resolution mechanism.

ON FINANCIAL TRANSACTION TAX:

"We have a wait-and-see attitude on it. Italy's decision on this French proposal will depend on who will apply it and how."

ON THE ECB SUCCESSION:

"We did not talk about the candidacy of Mario Draghi to the ECB presidency... This is not the right time. When it is the right time we will talk about it, in the proper places".

"Anyway, The Italian prime minister expressed an opinion on that and I agree with him. (Silvio Berlusconi has said that Draghi would be an excellent candidate for ECB chief.)

GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE

ON FINANCIAL TRANSACTION TAX:

"I still believe, one should do this in Europe".

UK FINANCE MINISTER GEORGE OSBORNE

ON SATURDAY'S AGREEMENT:

"We did take an important step forward by agreeing these indicators, which was quite a drawn-out process but we got to the right end-point.

"Very explicitly, in the communique it mentions exchange rates as part of the imbalances, as well as what we'd supported, which was public and private debt, and that gives us the green light to go forward to the April meetings to agree the guidelines by which we're going to assess the indicators.

EU MONETARY AFFAIRS COMMISSIONER OLLI REHN

ON PORTUGAL:

"It is essential that Portugal stick to its fiscal targets.

"Moreover, it is is essential that Portugal further substantiate the structural reforms that have been initially announced. It is a work in progress, and progress has been made."

ITALIAN TREASURY HEAD VITTORIO GRILLI

ON SATURDAY'S AGREEMENT:

"It is not certain that we will have numerical targets on indicators for imbalances.

"We agreed we will have guidelines on indicators but, for example if you consider trade balance and exchange rates, it does not make much sense to have specific numerical targets for both because they are strictly linked. So everything should be considered together.

"It was France that put in the biggest effort to clinch a deal with China, and it was China that posed the biggest obstacle to the deal."