Paulson: IMF relevance depends on forex monitoring

WASHINGTON, June 20 (Reuters) - The International Monetary Fund must vigorously pursue its new its rules on currency surveillance, particularly for China, to stay relevant, U.S. Treasury Secretary Henry Paulson said on Wednesday.

"Let may say that the reform is important, but the onus is on the IMF to be relevant," Paulson told reporters at the Treasury following more than two hours of testimony before the House Financial Services Committee.

The new IMF rules, announced on Monday, more clearly spell out signs of foreign exchange misalignment and add a new principle directing member nations to avoid policies that create instability in other countries.

Paulson said earlier he believes the changes would aid efforts to persuade China to adopt more flexibility in its yuan exchange valuation.

"They clearly have the flexibility they need in the reform, but the question is what's the role the IMF is going to play?" Paulson said. "As I've said on a number of occasions, the work the IMF does in a lot of areas is interesting, it's positive, but it could be more relevant.

He said for the IMF to truly be relevant it would have to return to its roots in currency monitoring, noting that was its mission when it was created in the 1944 Bretton Woods accords to oversee postwar currency exchange rates.

"Today, although there are plenty of currencies that aren't market determined, there's only one for a country that's as big and as integrated into the global economy in terms of trade in goods and services and that's China," he added.