Highlights: G20, IMF/World Bank meetings in Washington

WASHINGTON (Reuters) - The following are highlights of comments by finance ministers and central bankers in Washington this week for meetings of the Group of 20 and the semiannual meetings of the International Monetary Fund and World Bank.

BANK OF CANADA GOVERNOR CARNEY ON EURO WILL

"This is a fragile situation in Europe but it's fixable. ... It's not a question of ability for the euro zone. It is question of political will and ... taking these decisions in a timely manner that is ahead of the markets."

CANADIAN FINANCE MINISTER FLAHERTY ON EFSF FLEXIBILITY

"They (the Europeans) agreed in the communique last night to be flexible with respect to the facility, so that's progress."

JAPANESE DEPUTY VICE FINANCE MINISTER MASATSUGU ASAKAWA

ON THE YEN:

"I can't make any comment on the appropriate level for the yen. Logically speaking, as long as deflation goes on, there will be continuous pressure for the yen to rise."

ON WHETHER JAPAN CAN ADOPT MEASURES SIMILAR TO THOSE TAKEN BY SWITZERLAND TO CAP THE FRANC'S RISE: "Switzerland decided to abandon its independence on monetary policy. In Japan, that is simply not an option to take."

AUSTRALIAN TREASURER WAYNE SWAN:

ON POSSIBLE GLOBAL DOUBLE-DIP RECESSION

"The IMF has outlined its view on global growth, and it says that risk is on the downside. But they are still talking about global growth on the order of 4 percent. I think it is far too early to be making those sorts of dire predictions (of a double dip)."

ON ATMOSPHERE AT TALKS IN WASHINGTON

"There's a pretty somber mood in the meetings here."

ON WHETHER CHINA WOULD ALLOW YUAN APPRECIATION

"China has been a participant in all these discussions, and I believe they come to the table in good faith."

EUROPEAN CENTRAL BANK PRESIDENT JEAN-CLAUDE TRICHET

ON RISE OF RISKS:

"Risks to the stability of the EU financial system have increased considerably."

ON EUROPE AT THE CENTER OF A BROADER CRISIS:

"We have in front of us a global crisis of sovereign risk and we are the epicenter of this global crisis."

ON SPREAD OF STRESS:

"Over the past few months, sovereign stress had moved from smaller economies to some of the larger EU countries. Signs of stress are evident in many European government bond markets, while the high volatility in equity market indicates that tensions have spread across capital markets around the world."

ON RISKS OF CONTAGION:

"The high interconnectedness in the EU financial system has led to a rapidly rising risk of significant contagion. This is threatening financial stability in the EU as a whole and adversely impacts the real economy in Europe and beyond."

ON NEED FOR SWIFT RESPONSE:

"Looking ahead, decisive and swift action is required from all authorities."

ON NEED FOR COORDINATED EFFORTS;

"Authorities must act in total unison with a total commitment to safeguard financial stability. Supervisors should coordinate efforts to strengthen bank capital, including having recourse to backstop facilities, taking benefit from the possibility of the European Financial Stability Facility to lend to governments in order to recapitalize banks, including in non-program countries."

FORMER TREASURY SECRETARY AND WHITE HOUSE ADVISER LAWRENCE SUMMERS

ON SERIOUSNESS OF SITUATION:

"It's good that there are Bretton Woods institutions at a moment like this. This is the 20th annual meeting I have been privileged to attend. There has not been a prior meeting at which matters have had more gravity and at which I have been more concerned about the future of the global economy."

ON ECONOMIC RECOVERY:

"There has if anything been too much collective belt tightening. Our challenge is ensuring that growth proceeds at a satisfactory rate in the years ahead."

"The notion of expansionary fiscal contraction is oxymoronic and a bit moronic as well."

ON EUROPE'S PROBLEMS:

"The resolution of the situation in Europe in a way that will protect the global economy goes centrally to two questions. It goes to the credit of the large European sovereigns which has come into increasing doubt in the market system. And it goes to the credit of the major European financial institutions, whose ability to provide credit in the future has been impaired by what has happened.

"Without a resolution of that situation, matters in Europe will not be fundamentally changed.

"If a generous sovereign from Mars came down and paid off every penny of Greece's debt tomorrow, the fundamentals of the European crisis would not be altered. And I for one will not believe we have moved past the grudging incrementalist approach to policy that has been so costly so far until the terms of the policy discussion are not principally involving the next payment to Greece, as has been the case in recent weeks."

CITIGROUP CEO VIKRAM PANDIT:

ON IMPACT ON U.S. BANKS OF A EURO ZONE SOVEREIGN DEBT DEFAULT

"The direct financial exposure to the European banking system is extremely manageable. What's the indirect impact? You're going to have one massive demand shock... The fact is we should all expect some sort of a GDP impact if you have a demand shock that's going to be that significant and that's going to have an impact on business."

SOUTH KOREAN FINANCE MINISTER BAHK JAE-WAN:

"Rather than short-term fiscal consolidation plans, we need credible mid- and long-term ones that can balance short-term risks to growth and fiscal sustainability."

"Emerging economies, for their part, need to step up efforts to mitigate excessive capital flows with strengthened monitoring on capital movements, and the introduction of various macro-prudential measures."

"Financial safety nets should also be established in parallel at the global level to absorb potential external shocks sufficiently."

"The (IMF) fund should further strengthen its capacity to better cope with a crisis in large advanced economies, and to address a systemic risk that could lead to widespread crises. For these reasons, we must expedite the approval process on the fund's quota increase that was agreed last year, and discussion must begin now on the expansion of the Fund's available resources."