GLOBAL MARKETS-Dollar lower, stocks flat as caution creeps in ahead of Trump inauguration
* Safe-haven assets in demand, gold set for 4th week of gains
IMF WESTERN HEMISPHERE DEP'T DIRECTOR NICOLAS EYZAGUIRRE
ON U.S. FEDERAL RESERVE'S SO-CALLED 'OPERATION TWIST'
"That kind of a measure is something that would have an effect of appreciating the Latin American currencies. And what has happened is that Latin American currencies have been depreciating not appreciating.
"So the depreciation of Latin American currencies -- of Mexico and Brazil (which) has also sold dollars -- is related to the turmoil that is going on in financial markets given the crisis of Europe. It's not related to what the Federal Reserve did."
BRITISH FINANCE MINISTER GEORGE OSBORNE:
ON THE NEED FOR TIMELY ACTION:
"It's clear that the euro zone not just needs to implement the existing decisions but there needs to be a clear commitment that central banks provide liquidity, that there is enough capital for the banks, wherever that capital comes from, and the EFSF and the ECB need to provide the convincing firepower."
"People are aware that time is running out."
ON CONVINCING FIREPOWER:
"That is not necessarily a question of putting just additional sums of money in but also about how these sums of money that are there can be deployed."
"What is required now is a sense for the markets that there is enough government or central bank firepower to deal with that situation and I think the euro zone is very well aware of that."
IMF MANAGING DIRECTOR CHRISTINE LAGARDE:
LAGARDE ON EXPECTATIONS FOR IMF MEETINGS
"On the occasion of this meetings, we don't necessarily resolve everything, we can't possibly decide everything, but we actually come together sufficiently to establish a common diagnosis...to agree on a set of priority policies that you will feel comfortable with, taking back hope to your leaders and heads of government to actually pave a path to decision-making and a path to recovery."
"Our problems can be largely economic, but the solutions are essentially political solutions. We need commitment. We need courage."
ON U.S. AND EUROPEAN RESPONSIBILITIES:
"Very quickly the United States must reduce its fiscal deficit particularly for the medium and the long term. It must deal urgently with unemployment and it must relieve pressure on overly indebted households.
"Turning to Europe and more particularly the euro zone, it must deal urgently with the twin problems of sovereign and bank debt -- starting with the first -- and deal with them as a matter of urgency. The countries at the heart of the crisis must implement the programs that they have with the population but also with their partners and with the IMF because we are in this."
"They have made commitments. They have to deliver on those commitments. And equally their European partners must do whatever it takes to support them as they have committed to do."
WORLD BANK/IMF GROUP CHAIRMAN, BAHAMAS PRIME MINISTER HUBERT INGRAHAM ON THE EUROPEAN CRISIS
"The Fund, in close collaboration with EU institutions, has been actively involved in providing financing to those countries most affected by the sovereign debt crisis, and will continue to be involved in finding solutions."
"Amid resurgent global economic uncertainties, we have become even more aware of the danger of commodity price volatility ... The Bank will spend over $6 billion dollars in the agricultural sector, an increase of over $2 billion from a few years ago, while the IFC launched a new agricultural price-risk management tool that will provide up to $4 billion to protect farmers and consumers in developing countries."
BRAZIL'S FINANCE MINISTER GUIDO MANTEGA:
ON THE EUROPEAN CRISIS:
"We have seen a worsening of the global economic crisis in the past few months. Actually, developed countries have never overcome this crisis."
"We run the risk that this crisis will become more serious. There is a risk that the sovereign debt crisis of European countries turns into a global financial crisis."
"We believe that Europe has conditions to face the crisis, if they approve their (bailout) fund with new characteristics. The problem is the timing for its approval. Europe is running against time."
"I hope Europe does not wait for the first countries to break before putting new instruments in place because then the bill will be higher.
"Let's not fool ourselves, that is a crisis that will spread throughout the world."
ON BRAZIL'S FISCAL AND FOREX SITUATION
"At a moment when several countries are suffering from fiscal weakness, Brazil has a very solid fiscal position. By cutting current spending, we have more room to increase investments and to lower interest rates, which remain very high in Brazil."
"The reason behind the weakening of the real is a sharp adjustment in the derivatives market, not dollar outflows."
CANADIAN FINANCE MINISTER JIM FLAHERTY:
ON WHETHER EUROPE'S RESPONSE WAS ADEQUATE NOW:
"We're not quite there yet. Some progress last night. You probably saw from the communique there's some language with respect to flexibility. We've been pressing the need to have adequate capacity in the European facility in order to deal with bank recapitalization in Europe...Our view is it needs to be larger to have the clear capacity to overwhelm the problem."
ON WHETHER A GREEK DEFAULT WAS NOW INEVITABLE:
"Greece is in a very difficult position in terms of paying its debt. I think that's plain to everyone. The key I think is the knock-on effect on banks and making sure that that contagion is controlled, and it's very important that the facility that's being put into place has the capacity to deal with the issue...What I see is a grave challenge for Greece to meet its obligations."
"Certainly in Europe we need an exercise of political will. We need decisiveness. We need clarity, and I made all those points last evening."
"On the fiscal consolidation issue...we intend in Canada to stay on our track (of deficit reduction)."
GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE:
"There is a broad consensus among the G20 that high deficits are one main reason for the crisis."
"Therefore there was a also a broad consensus that we have to continue on our way to reduce deficits"
"We (the Europeans) have already said that the legislative steps to implement the decisions from the euro summit (for strengthening the EFSF) will be finished mid-October, the latest. I think this is good news."
"At the moment, the troika is working on a technical level on a new report, which will be precondition for the next payment out of the help package for Greece."
"I do not know if in the light of the troika report something has to be changed on the plans being made for Greece (the second help package)."
"It does not make sense to speculate right know about additional steps."
"The Europeans know their responsibility and will act according to this."
EUROPEAN CENTRAL BANK GOVERNING COUNCIL MEMBER EWALD NOWOTNY
ON POSSIBLE REINTRODUCTION OF ONE-YEAR LIQUIDITY TENDERS:
"During the time of the financial crisis, one of the instruments we had was, in the context of full allotment of policy, to have one-year tenders. I think it might be advisable to think about reintroducing this approach."
Asked if the ECB should consider longer-term maturities of up to two years, he said: "I think we do have a kind of established toolkit and I do not see a need to expand about this, but as this is something we have had already, I think we could discuss a reintroduction."
Asked how quickly the tenders could be relaunched, he said, "This is something that we have to discuss in the ECB."
ECB POLICYMAKER AND BUNDESBANK PRESIDENT JENS WEIDMANN
ON MARKET LIQUIDITY:
"I don't want to speculate what we could do. In the past we have said that we are prepared to provide the market with longer-term liquidity when it is necessary."
"We still have full allotment (unlimited liquidity) and with the non-standard measures the central bank and the euro system has shown that has the ability to act."
ON THE GERMAN ECONOMY:
"A new recession (in Germany) is not my expectation,"
(Washington newsroom +1-202-898-8310)
* Safe-haven assets in demand, gold set for 4th week of gains
SHANGHAI, Jan 20 China has allowed its five biggest banks to temporarily lower the amount of money that they must hold as reserves to relieve pressure in its financial system as demand for cash surges ahead of the Lunar New Year holiday, three sources with direct knowledge of the matter said.
DAVOS, Switzerland, Jan 20 Russia's economy could grow by 2 percent in 2017 as long as there are no external shocks such as a renewed fall in oil prices, Economy Minister Maxim Oreshkin said on the sidelines of the World Economic Forum in Davos.