HIGHLIGHTS-IMF, World Bank, G20 meetings in Washington

Sat Apr 20, 2013 7:04pm EDT

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WASHINGTON, April 20 (Reuters) - The following are comments on Saturday from
finance officials in Washington for the semiannual meetings of the International
Monetary Fund and World Bank, and a meeting of Group of 20 leaders.
    
 
    
    SWISS NATIONAL BANK CHAIRMAN THOMAS JORDAN ON THE FRANC: 
    "'Adjustment fatigue' could lead to a resurgence of the crisis and one must
add that this would have an impact on Switzerland. In such an uncertain
environment, the minimum exchange rate policy of the central bank remains
indispensable." 
    "The Swiss franc is still very high."
    
    GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE ON DEBT REDUCTION:
    "Fiscal and financial sector adjustments remain crucial to regain lost
credibility and strengthen confidence. International cooperation remains
crucial. At the current juncture, it is in particular the responsibility of the
advanced economies, including Japan and the U.S., to follow through with
ambitious fiscal consolidation over the medium-term to reduce public debt ratios
which in several cases have reached unsustainable levels." 

    INDIAN FINANCE MINSTER P. CHIDAMBARAM ON GLOBAL OUTLOOK:
    "We are meeting at a time when there are some signs, albeit tentative, of
stabilizing global economic activity. Although financial market conditions have
improved, their impact on the real economy has been muted so far. Global growth
remains weak and the global economy continues to face several risks. Moreover,
some new concerns have also arisen. As such, the global economy continues to
pose huge challenges for policymakers, particularly in advanced economies."
    
    BANK OF ALGERIA GOVERNOR MOHAMMED LAKSACI:
    "It will be also important to ensure that Fund advice as well as its
financial and technical support is tailored to (Middle East-North Africa)
countries' exceptional circumstances and needs and that macroeconomic and
structural policy implementation remains consistent with the objective of
achieving successful transition."
    
    JAPANESE FINANCE MINISTER TARO ASO ON EXCHANGE RATES:
    "The commitment from G20 countries to avoid targeting exchange rates for
competitive purposes, and to resist all forms of protectionism and keep markets
open is a fundamental principle of economic policy management that should be
respected by all IMF member countries."
    
    ASO ON BENEFICIAL IMPACT OF MONETARY EASING IN RICH WORLD:
    "If such monetary easing succeeds in avoiding financial crises and placing
advanced economies on the path of recovery, it will produce positive effects for
the entire global economy." 
    
    CHINA CENTRAL BANK CHIEF ZHOU XIAOCHUAN:
    "Although unconventional monetary policies in major advanced economies have
helped stabilize financial markets and foster economic recovery, it is necessary
to reevaluate the marginal benefits and costs of such policies after multiple
rounds of monetary easing.
    "Unconventional monetary policies alone cannot solve the structural problems
faced by advanced economies, and should not become a substitute for structural
policies.
    "Prolonged easing could exacerbate the financial vulnerabilities and affect
the stability of the international monetary system."
 
    EUROPEAN CENTRAL BANK'S EWALD NOWOTNY ON EFFECT OF JAPAN'S MONETARY
EXPANSION ON THE EURO:
    "As far as the exchange rate goes (against the yen), we are at the same
level we were two years ago. That means I don't see any massive threat to
Europe."
    "However, you have to monitor this development very closely. If this dynamic
were to continue, those would be moves of a relevant magnitude."
    
    THARMAN SHANMUGARATNAM, DEPUTY PRIME MINISTER OF SINGAPORE 
AND MINISTER FOR FINANCE AND IMFC CHAIRMAN ON STRUCTURAL REFORMS:
    "There was a very strong view that we had to place greater emphasis on
structural reforms, structural reforms to create jobs as well as to boost
productivity."
    "There also had to be stronger emphasis on credibility of medium-term fiscal
consolidation."
    
    THARMAN ON MONETARY POLICY:
    "There still needed to be accommodative monetary policy in advanced
economies, but an over-reliance on accommodative monetary policy without
addressing the need for credibility in medium-term fiscal consolidation and
without stepping up the pace of structural reforms was unlikely to lead us back
to normal growth."
    
    THARMAN ON EXCHANGE RATE POLICIES: 
    "You can't rely entirely on defensive measures to keep your exchange rate
unchanged because if you do that then there's an implication for the domestic
money supply and liquidity. ... Neither do we take the view that short-term
capital flows ... should be accommodated fully by exchange rates."
    
    IMF MANAGING DIRECTOR CHRISTINE LAGARDE ON MONETARY, FISCAL POLICIES:
    "In its advice and analysis, the Fund will seek the right balance between
supporting growth (including through monetary easing) and removing the millstone
of high private and public debt ... "
    "Worries over currency valuations and competitive depreciation are on the
rise."
    
    LAGARDE ON IMF STUDYING MONETARY POLICY:
    "IMF will be doing some additional work on consequences of unconventional
monetary policy - and what will be the consequences of the variety of exit and
what will be the good exits as opposed to the more unpleasant exits for all
members."
    "... We certainly heard from entire membership that it is unconventional
that central bankers ... jumped into an unknown landscape, uncharted territories
as they have said and there is clearly a common view that we should do further
work and investigation and academic research to make sure we identify the risks
and benefits of any exit."      
    
    ECB'S JENS WEIDMANN ON CENTRAL BANK POLICIES:
    "The more a central-bank gets involved in fiscal-policy, the more its
independence is in danger ... "
    "It is clear, that the longer an ultra-expansionary monetary policy is
pursued, the more the risks increase." 
  
    GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE CENTRAL BANK POLICIES: 
    "Every independent institution has to have a limited mandate." 
    "Japan must be very careful ... Japan had to face critical questions." 
 
    IMFC COMMUNIQUE ON FISCAL AND MONETARY POLICY:
    "Credible medium-term fiscal consolidation plans remain crucial, in
particular for the United States and Japan. Accommodative monetary policy is
still needed to help bolster growth but needs to be accompanied by credible
medium-term fiscal consolidation plans and stronger progress on financial sector
and structural reforms. This will also help contain any potential impacts of
monetary easing on capital flows and exchange rates. Eventual exit from monetary
expansion will need to be carefully managed and clearly communicated."
 
    IMFC COMMUNIQUE ON EURO ZONE POLICIES: 
    "In the euro area, further progress in repairing bank balance sheets and
reducing financial fragmentation is crucial. Structural reforms to boost
productivity and employment need to continue. Further tangible progress is
needed on core elements of an effective banking union and a stronger fiscal
union, to strengthen the resilience of the monetary union."
    
    IMFC COMMUNIQUE ON EMERGING MARKET POLICIES:
    "With activity picking up, policies should be recalibrated to rebuild
buffers and guard against financial vulnerabilities."
    "When dealing with macroeconomic or financial stability risks arising from
large and volatile capital flows, macroeconomic policy adjustment could be
supported by prudential measures and, as appropriate, capital flow management
measures. Such measures should not, however, substitute for warranted
macroeconomic adjustment."
       
    MEXICAN FINANCE MINISTER LUIS VIDEGARAY ON NEGATIVE SPILLOVERS FROM MONETARY
EASING IN OTHER COUNTRIES:
    "It's clear that advanced economies are not ready yet to abandon this state
of monetary easing and it is in the best interest of developing countries for
advanced economies to continue to support these policies in terms of growth."
    "It's not only about restricting advanced economies in their monetary policy
but it's also about how developing countries react in terms of their own
regulation. It's a challenge and it's going to continue to be a challenge."
    
    VIDEGARAY ON EFFORTS WITHIN THE G20 TO COMBAT TAX AVOIDANCE:
    "We were hoping for more specific language. We were hoping for a commitment
to adopt this mechanism, or at least express an interest, by our next meeting in
St. Petersburg. That unfortunately was not part of the communique."
    "We need to have multilateral levels for information exchange." 
   "This would be extremely useful for a small, open economy like Mexico."
  
    ANGEL GURRIA, SECRETARY-GENERAL OF THE ORGANISATION FOR ECONOMIC COOPERATION
AND DEVELOPMENT, ON GLOBAL STABILITY:
    "There is also a risk that global imbalances and financial stability issues
have not been addressed adequately and problems will emerge again as the economy
picks up."
    "Global financial markets show signs of renewed exuberance that is
increasingly out of line with fundamentals. This gaping disconnect between the
financial sector and the real economy should be a source of concern."
    "Given limited fiscal space in most OECD countries, monetary policy remains
a key instrument for supporting demand, even though monetary stimulus may not
always be sufficient to close output gaps quickly and carries its own risks."
    "The boldness of (Japan's) moves have boosted confidence and improved the
chances of escaping from deflation and achieving more satisfactory output
growth."
 
    UNITED ARAB EMIRATES CENTRAL BANK GOVERNOR SULTAN N. AL-SUWAIDI ON GLOBAL
GROWTH:
    "Global prospects are still hampered by the lack of clarity in advanced
economies' policies where reliance has been primarily on short-term measures
that do little to strengthen confidence in a durable way." 
    
    AL-SUWAIDI ON EUROPE:
    "A key concern in Europe is adjustment fatigue as the crisis extends in
duration and scope with slow progress in moving toward economic and banking
union, and more efforts are needed to address weak balance sheets and the weak
monetary transmission and credit intermediation."
    
    AL-SUWAIDI ON DEVELOPING COUNTRIES:
    "Most emerging market economies continue to be a source of stability and
growth with little signs of overheating and are expected to return to pre-crisis
growth levels with a receding risk of a hard landing. Some Low-Income Countries
(LICs) are also undergoing sustained strong growth, reaping the gains from
prudent macroeconomic policies and structural reforms. However, a large number
of developing countries and LICs are adversely impacted by the double-dip
recession in Europe and sluggish growth in the U.S. and Japan. Commodity
exporters are at risk given the expected decline in most commodity prices in
2013."
     AUSTRIAN FINANCE-MINISTER MARIA FEKTER ON U.S., JAPAN POLICIES: 
    "In the United States ... policymakers need to address persisting fiscal
policy uncertainty and install a credible medium-term fiscal consolidation
framework." 
    "The prolonged monetary easing in the U.S. could create economic and
financial distortions, understate the importance of fiscal consolidation, and
spur destabilizing capital flows to other regions."
    "We welcome the recent bold policy steps taken by the Japanese authorities."
    "Nevertheless easy monetary policy  cannot be a substitute for the much
needed medium-term fiscal consolidation." 
    BELGIAN FINANCE MINISTER KOEN GEENS ON DEBT REDUCTION:
    "The global economy remains confronted with significant legacies from the
build-up of imbalances prior to the crisis. So far, these have not been fully
addressed. Public debt levels remain very elevated in many advanced economies.
The (IMF) Fund rightly recommends ... comprehensive medium-term deficit
reduction plans that would achieve gradual but persistent consolidation." 
    
    GEENS ON NEED FOR STRUCTURAL ADJUSTMENTS
    "The accommodative monetary policies of the major central banks have reduced
risk aversion and supported balance sheet corrections and growth. However, such
policies do not provide a lasting solution to the structural problems that
governments and prudential supervisors should help address. Without structural
adjustments, monetary policy may become overburdened."  
  
    ANDERS BORG, SWEDEN'S FINANCE MINISTER, ON FISCAL PLANS:
    "The unsustainable fiscal situation in the U.S. and Japan is a source of
concern and uncertainty. Credible medium-term fiscal plans should be promptly
developed."
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