HIGHLIGHTS -IMF, World Bank, G20 meetings in Washington
WASHINGTON, Oct 12 (Reuters) - The following are comments on Saturday from finance officials in Washington for the fall meetings of the International Monetary Fund and World Bank. SWISS NATIONAL BANK CHAIRMAN THOMAS JORDAN: "We still have a strong currency, the Swiss franc is highly valued ... even after the situation at the moment with fiscal policy in the United States, the exchange rate remained above the minimum." "We have a very stable situation at the moment, the minimum exchange rate remains extremely important, this is a crucial tool of our monetary policy in order to avoid the tightening of monetary conditions in Switzerland." IMFC COMMUNIQUE ON ADVANCED NATION POLICIES "The eventual transition toward the normalization of monetary policy in the context of strengthened and sustained growth should be well timed, carefully calibrated, and clearly communicated. Where country circumstances allow, medium-term fiscal plans should be implemented flexibly to take account of near-term economic conditions to support growth and job creation, while placing government debt on a sustainable track... "The United States needs to take urgent action to address short-term fiscal uncertainties. The euro area should build on progress toward banking union and further reduce financial market fragmentation. Japan should implement medium-term fiscal consolidation, and structural reforms to invigorate growth." IMFC ON FOREX, PROTECTIONISM, FINANCIAL REFORMS "We reaffirm our commitment to refrain from competitive devaluations and all forms of protectionism. Global financial reforms, including in the areas of 'too-big-to-fail,' international capital standards, cross-border resolution, derivatives markets, and addressing the potential systemic risks in shadow banking, need to be implemented promptly and consistently." IMFC STATEMENT ON FUNDING "External financing, including on a precautionary basis, can help facilitate orderly adjustment. The Fund continues to be prepared to offer financing to support appropriate adjustments and reforms." IMFC STATEMENT ON QUOTA REFORM "We continue to attach the highest priority to the IMF governance and quota reform to enhance the Fund's credibility, legitimacy and effectiveness. We urge all members who have yet to ratify the 2010 reforms to do so without delay. We remain committed to completing the 15th General Review of Quotas by January 2014, and urge the Executive Board to agree on a new quota formula as part of that review." SINGAPORE FINANCE MINISTER THARMAN SHANMUGARATNAM, IMFC CHAIRMAN, ON SPILLOVERS "The spillovers that come about from large country policies were uniformly acknowledged. Everyone knows that these are inevitable consequences as policies are reset. And there was a consistent view, from the emerging market economies, that the eventual normalization of monetary policy ... as the economies recover in the West will be a net positive." "The key task is to focus on the transition, prepare ourselves well for this eventual normalization. It's not imminent but it will happen." ARGENTINE ECONOMY MINISTER HERNAN LORENZINO ON GROWTH OF EMERGING ECONOMIES: "We consider that there is an excess of generalization in the overall analysis on the diminishing strength of emerging markets without due distinction of regions with stronger positions and buffers. Furthermore, as far as most problems are of a cyclical nature, (emerging markets and developing countries) as a group will continue to grow at a steady, sustained and strong speed to remain the driving force of the global economy." CHINA'S DEPUTY CENTRAL BANK GOVERNOR YI GANG ON RISKS FROM UNCONVENTIONAL MONETARY POLICIES: "While unconventional monetary policies helped stabilize growth and financial markets in advanced economies after major crises, more attention should be given to the risks associated with the prolonged use and disorderly exit of such policies." ON WHAT TOOLS NEEDED TO DEAL WITH QE SPILLOVERS: "A flexible policy stance and enhanced safeguarding measures, including emergency swap lines, will also be helpful in assisting the economies in facing the challenges posed by the external environment." ON EXCHANGE RATE: "The Chinese authorities remain committed to exchange rate reform, and will enhance a two-way movement in the renminbi exchange rate around the appropriate equilibrium level." ECB GOVERNING COUNCIL MEMBER JENS WEIDMANN ON THE WITHDRAWAL OF MONETARY SUPPORT: "Central banks cannot simply keep stepping on the monetary gas pedal for eternity. A firming in economic conditions in developed countries makes it more probable that there will be a gradual withdrawal of unusually expansive monetary policy." GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE ON SPILLOVERS: "Accommodative monetary policies continue to support the global recovery. It would be wise to prepare for the unavoidable transition to more normal monetary conditions, while keeping a watchful eye on risks arising in the current low-interest rate environment." ON IMF REFORM: "U.S. Congress ratifying the last reform is the prerequisite for taking the next step. Then we Europeans will feel the heat a bit more because we have to provide our second seat." "The other question is the quota formula, and we will continue to insist that an economy's openness should be an important part of the reform." "If you want sustainable global growth, you must ask for more transparency from economies." MALAYSIA CENTRAL BANK GOVERNOR ZETI AKHTAR AZIZ ON UNCONVENTIONAL POLICIES: "The unconventional policy measures adopted by the major advanced economies were effective at the height of the global financial crisis. Market functioning was broadly restored, and tail risks declined significantly. Nonetheless, evidence that the measures have resulted in the resumption and reinvigoration of growth has not yet to be forthcoming." ON MANAGING NORMALIZATION OF MONETARY POLICY: "In this extraordinary (monetary policy environment), the IMF's policy toolkit needs to be expanded to include policy tools for (emerging markets and developing economies) to manage the challenges and implications of the continued implementation of such policy measures, as well as the eventual exit of these measures." SAUDI ARABIAN MONETARY AGENCY GOVERNOR FAHAD ALMUBARAK'S STATEMENT TO THE IMFC ON THE U.S. BUDGET IMPASSE: "Agreements on increasing the debt ceiling and on a continued resolution to fund government agencies should be reached soon. Any delay in these areas could impact market confidence and undercut growth. In view of these developments, the argument for a strong medium-term fiscal consolidation plan to replace the sequester is more valid than ever." ON ARAB ECONOMIES: "Arab countries in transition ... continue to face important challenges, including restoring stability and growth to be in a position to offer job opportunities, particularly for the educated youth. In this process, these countries continue to deserve strong support from the international community. While these countries are benefiting from strong financial support from Saudi Arabia and other donors in the region, we encourage other donors to step up their contributions. We call on the Fund to fulfill its catalytic role and remain engaged and tailor its support to the need of each country." RUSSIAN FINANCE MINISTER ANTON SILUANOV ON ADVANCED ECONOMIES: "The sustainability of renewed growth in advanced economies is questioned by many analysts. Indeed, this growth is taking place against the backdrop of unprecedented monetary stimulation. In effect, we are witnessing a return to the old model of growth based on low interest rates and rapid credit expansion, which led to the global financial crisis in the first place." ON FINANCIAL RISKS: "We are concerned that the low interest rates environment already in place for many years is leading to the emergence of new financial risks, since the search for yield makes investors buy risky low-quality assets." ON FINANCIAL TURMOIL FROM MONETARY EXIT: "We expect that the approaching exit from unconventional monetary policies and normalization of interest rates will be accompanied by considerable turmoil in the financial markets. The assumption that the asset price correction that began this summer has already been largely completed does not seem to be plausible to us." ON UNCONVENTIONAL RESPONSE FROM EMERGING MARKETS: "It is difficult to say at this stage what sort of conclusions (emerging market) countries will draw from the recent developments. Perhaps, next time they may want to respond to unconventional monetary policies in advanced economies with some kind of unconventional policies of their own." LITHUANIA MINISTER OF FINANCE RIMANTAS SADZIUS ON FOSTERING STABLE GROWTH: "To foster stronger growth and employment, monetary support must be complemented by credible medium-term fiscal policies and structural reforms. History has shown that long periods of easy money can contribute to the build-up of risks. The IMF should carefully monitor all such developments." SPANISH ECONOMY MINISTER LUIS DE GUINDOS WITHDRAWAL OF US MONETARY STIMULUS: "Monetary conditions should remain accommodative as long as needed and, in the case of the United States, exiting from monetary stimulus, when appropriate, needs to be clearly and timely communicated as well as mindful of its spillovers in other countries." SOUTH KOREAN DEPUTY PRIME MINISTER AND MINISTER OF STRATEGY AND FINANCE OH-SEOK HYUN ON WITHDRAWAL FROM UNCONVENTIONAL MONETARY POLICY (UMP): "While exit from UMP should suggest a strengthening in key advanced economies...a disorderly withdrawal could cause significant disruptions to financial markets and lead to large abrupt outflows of capital. Economies can prepare for the reversal of capital flows associated with exit by embracing flexible policy settings and building adequate fiscal and external buffers to guard against disorderly adjustments." "For UMP central banks, clear and effective communication will be critical to the success of tapering as evidenced by financial markets' heightened sensitivity to announcements on monetary policy earlier this year." ON IMF QUOTA REFORM: "Maintaining the legitimacy, credibility and effectiveness of the IMF is only possible when governance and quota reforms keep pace with the shift in the relative economic weights of its members." GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE ON IMF REFORM: "The usual governance questions are before the IMF. The U.S. Congress must also actually (progress) with the ratification of the last round to give the starting signal for the next step." AUSTRALIAN TREASURER JOE HOCKEY ON IMF OUTLOOK: "There are high expectations for us as the chair of the G20 next year that we will have a simple agenda, not a complicated or overly ambitious agenda, and that we will focus on real outcomes." JAPAN DEPUTY PRIME MINISTER AND FINANCE MINISTER TARO ASO ON FED TAPERING: "The U.S. tapering of quantitative easing could have potential spillover effects on emerging market economies; this would need to be properly addressed. It is of foremost importance that emerging market economies steadily implement appropriate macroeconomic policies, structural reforms, and appropriate micro- and macro-prudential supervision in order to make their economies more resilient to external shocks." ON IMF REFORM: "To enhance its legitimacy, effectiveness and credibility, it is essential that the Fund make continuous efforts to complete its own governance reforms, including the quota review." "Japan believes that due consideration to the records of financial contributions, and to the quota shares of emerging and developing countries, are mutually compatible issues." ITALY MINISTER OF ECONOMY AND FINANCE FABRIZIO SACCOMANNI ON IMF REFORM: "Considering the tight deadline of January 2014 agreed at the political level, it is of the essence to deliver on our commitments, including the agreement on a quota formula within the context of the 15th General Review of Quotas. In this respect, a balanced and comprehensive package - that deals with all the issues in the quota formula - and a spirit of compromise by the whole membership are needed." EUROPEAN CENTRAL BANK'S EWALD NOWOTNY STATEMENT TO THE IMFC ON THE U.S. BUDGET IMPASSE: "Prolonged uncertainty about the U.S. budget process has a potentially large disruptive impact throughout the world. The exit from the Fed's unconventional monetary policy has been put on hold as the recovery and employment gains are yet to prove their durability. Policy uncertainty is yet again at the forefront in the U.S. and threatens the promising private sector-led rebound in activity." ON U.S. FEDERAL RESERVE POLICY COMMUNICATIONS: "We also encourage the U.S. Federal Reserve to engage international dialogue in order to minimize unwarranted negative spillovers from the exit of its unconventional monetary policy measures on other countries." ON THE RISK TO EMERGING MARKETS FROM FED POLICY TIGHTENING: "The policymakers in countries under market pressure should use the delay in the Fed's tapering to address these imbalances in order to be better prepared for the eventual monetary tightening in the U.S...Structural reforms and flexible policy frameworks including exchange rates will be essential, while capital flow management measures, FX interventions and prudential policies can at most smooth the adjustment process." "Global financial stability is a shared responsibility. The Fed should therefore clearly communicate the path of its intended policy actions to minimize negative spillovers which could undermine the policy adjustment efforts of emerging markets." SOUTH AFRICAN FINANCE MINISTER PRAVIN GORDHAN ON RISKS TO GLOBAL ECONOMY FROM U.S. FISCAL POLICY, FED EXIT "Uncertainty regarding the unwinding of unconventional monetary policies and the threat of potentially devastating budgetary challenges continue to pose serious risks to the global economy. In particular, clarity in the communication of an exit strategy regarding the withdrawal of monetary stimulus is critical in minimizing the negative impact thereof."