January 30, 2011 / 8:27 PM / 8 years ago

France's Lagarde urges G20 currency group

PARIS, Jan 30 (Reuters) - French Economy Minister Christine Lagarde called for the creation of a group, including China, in the G20 to debate currency issues.

She also said France needed more support if it was to push through its proposal for a tax on financial transactions.

In an interview with France’s La Tribune newspaper to be published on Monday, Lagarde echoed a proposal floated by French President Nicolas Sarkozy last week on how the Chinese yuan should be included in the IMF’s basket of currencies, known as the special drawing rights. [ID:nLDE70N13K] [ID:nLDE70N0EE]

“This could encourage the Chinese to move towards the convertibility of the yuan,” Lagarde said.

France took over the rotating presidency of the G20 last week and set out a three-pronged agenda: tackling swings in commodity prices, finding ideas for a new Bretton Woods system on monetary issues and redrawing economic governance rules.

Some have questioned how much progress France will be able to make on these issues, after getting a lukewarm reception in Washington and Beijing.

Lagarde also told la Tribune that she had good support at the recent Davos forum in Switzerland for a proposal to create a code of good conduct for capital movements. “We need to opt for a code of conduct that will allow us to regulate, temper, and control capital movements.”

Separately, Lagarde sounded a more realistic note on France’s proposal at the G20 to create a tax on financial transactions to fund a proposed $100 billion a year in aid for poor countries.

“We must admit that there are numerous countries that are very recalcitrant on this, and we are working on this with the Germans,” she said, adding that taxes on containers, new air or sea shipping routes, or tobacco were being considered.

“The President was clear, he said there would be a group, a coalition of pioneers,” said Lagarde. “We cannot go ahead if we are all alone on this.”

Reporting by Leila Abboud

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