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HIGHLIGHTS - Policymakers' comments at end of G20 meeting

BUSAN, South Korea (Reuters) - Following are comments made by policymakers after a meeting of Group of 20 finance ministers and central bank chiefs in South Korea.

Bank of Korea Governor Kim Choong-soo, South Korea's Finance Minister Yoon Jeung-hyun, France's Economy Minister Christine Lagarde and Bank of Canada Governor Mark Carney (1st Row, L-R) sit for a group photograph at the G20 Finance Ministers and Central Bank Governors meeting in Busan June 4, 2010. REUTERS/Nicky Loh


“Europe laid out a very strong, very powerful framework of reforms and financial support and they are moving very quickly to put the full political force of their goverments behind that framework. And my understanding, of course, from colleagues in Europe, is that they expect to finalize the details of this very substantial financial stability mechanism in the next hours, couple (of) days.”

On China:

“China has laid out a very ambitious set of reforms designed to help strengthen growth in household income to strengthen consmption growth, to increase the basic rules of the market in allocating investment and to strengthen domestic demand. That reform agenda is built on a pragmatic recognition that as China grows larger as a share of the world economy it does not want to be depending as much as it did in the past on external demand, including from the United States.

“A necessary part of that process of reform, and the Chinese leaders have acknowledged this and recommited to this, is to resume what they call the reform of their exchange rate mechanism. But I don’t have anything more to say on that.”

On German growth, fiscal consolidation:

“My sense is that they understand how important it is to Germany, to Europe and the world, that Germany be growing. It’s important to recognize that the underlying strength of recovery in Germany -- it’s true in Japan too -- coming into this period of concern about Europe, was stronger than anybody expected... My sense is that the German government has a very good appreciation of the challenges ahead and how important growth is going to be not just to the success of their financial plans in Europe -- to help stabilize confidence in Europe -- but also to the success of the broader fiscal conssolidation plans that are going to be important around the world.”

On bank transparency:

“There is a very strong recognition of the value of bringing greater transparency and disclosure to the major institutions in these markets and to the markets themselves. That basic commiment to transparency was criticial in the process that we went through in the United States, to recapitalize our financial system with private money. It’s central to the reform principles adopted by the G20, and those the U.S. is about to embrace in law.

“Markets work better when people have a better sense of how to assess risk, markets work better when they’re not opperating in the dark.”


“We all share with our G20 partners the view that our first and foremost challenge is to reinforce confidence and contain the financial turbulence.

“Our G20 partners fully support the very substantial operations the European Union has been and are putting in place to enhance stability in Europe.”

“In discussions with partners, I felt that they share the European concerns about the need for globally coordinated and differentiated exit strategies.

“The EU considers that fiscal consolidation must be ambitious and differentiated in terms of size and pace, in other words it should start next year, 2011, at the latest.”

On Hungary:

“Hungary has made serious progress in consolidating its public finances over the last couple of years.”

“Now the Hungarian economy is on the way to recovery and has shown the first signs of strength in the first quarter of this year. Therefore, any talk of a fiscal or debt default in Hungary is widely exaggerated.”


On bank stress tests:

“As you know there is a certain exercise which has been done ... and this exercise is about to be terminated so we will see exactly how ... authorities will take stock of this exercise which has been done at the level of the European Union on the basis of parameters that have been given by the EU Commission and ECB and I expect appropriate communication will take place at that moment.”

On EU policies:

“It was very important in all circumstances ... that we would have a solid sense of direction of the medium-term context, both in terms of monetary policy and the guarantee of price stability over the medium term ... and it was the same for fiscal policy. It’s necessary to have a medium-term sustainable fiscal policy.”


Asked if he was comfortable with the change of tone at these talks to call for swifter fiscal consolidation in Europe:

“Totally comfortable, I’m not the champion of the fiscal stimulus, I’m the champion of the right fiscal policy. The right fiscal policy two years ago was to put in place the stimulus, the right fiscal policy today is a bit more complicated because it depends on the countries ...

“Some countries have to go back rapidly to normalcy. Some others may go on with letting the stimulus expire by its own.

“Everyone agrees some effort has to be made on the deficit side ... the IMF does believe that in European countries you need an effort on the deficit and to boost growth.

On China:

“The IMF still believes that the renminbi (yuan) is substantially undervalued ... even a revaluation of 20-25 percent doesn’t solve all the imbalances and you have more to do, so it’s only part of the problem and you still have other imbalances,” he added.


“Member countries this week made some progress in narrowing their differences of opinion on the financial safety net proposal. I expect member countries to reach an agreement on the issue by the November summit.

“(The bank levy issue) was among the main topics that played the role of prolonging discussions this time.

“I hope progress will be made on the (bank levy) issue with more details available by the November summit.”


“There was no explicit discussion of the level of the euro. The issues with the euro zone and the fiscal problems faced by some of the members of the euro zone did come up in discussion, and reinforced the view of the G20 that these countries with these fiscal challenges need to get on and deal with them.”

“From my conversations with other participants there’s been a notable change of tone and the new British government has contributed to changing the tone at the G20.”


“I explained at the G20 that the Japanese economy is picking up gradually and the domestic private demand shows bright moves.”

“Strains in European financial markets caused the Japanese stock prices to weaken, but money markets and bond markets in Japan have been stable at the moment.”

“I feel other countries are increasingly sharing the view that Japanese economy has proved stronger than initially thought early in the year. The BOJ is striving to help boost domestic demand by clarifying our stance now to keep very easy monetary conditions.”


“Other countries said they expect Japan to boost domestic demand... I clearly voiced Japan’s determination to achieve both fiscal reform and economic growth under a new cabinet, although that entails political risks ahead of the election.”

“Weak euro has a significant impact on exports from Japan and other countries to EU, as well as on stock markets... In a short term, it has a negative impact on Japanese exports.”

“We expressed a commitment to map out mid-term fiscal framework and long-term fiscal strategy by the end of June. I believe it is impossible for prime minister not to bring them to the (G20) summit and that he will immediately tackle it after forming a new cabinet.”


“There is no agreement to proceed with an ex ante bank tax.”