HIGHLIGHTS -IMF, World Bank, G20 meetings in Washington

Sat Oct 12, 2013 7:26pm EDT

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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."
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