WASHINGTON, April 18 (Reuters) - The following are comments on Thursday from finance officials in Washington for the semiannual meetings of the International Monetary Fund and World Bank, and a meeting of Group of 20 leaders.
MEXICAN FINANCE MINISTER LUIS VIDEGARAY ON ASSET PRICE BUBBLES:
“There is a call from the G24 members to have clear coordination and better communication between advanced economies and emerging markets ... towards using coordination as a way to mitigate these potential asset appreciation bubbles. The consensus is that this is something that has to be closely monitored.”
“We call on (advanced economies) to take into account the negative spillover effects on (emerging markets and developing countries) of prolonged unconventional monetary policies, including on inflation and the volatility of capital flows and commodity prices.”
BANK OF JAPAN GOVERNOR HARUHIKO KURODA ON WHETHER JAPAN IS LIKELY TO DRAW CRITICISM FROM G20 NATIONS OVER ITS AGGRESSIVE EASING:
”I don’t think there will be such discussion. Our so-called quantitative and qualitative monetary easing was taken purely for domestic policy reasons, which is to achieve price stability and meet our 2 percent price target roughly in two years. It is absolutely not aimed at weakening the yen.
“We’ve made that clear to markets and policymakers around the world. I think we’ve gained broad understanding on that point.”
“In general, I don’t see signs of asset price bubbles brewing in emerging economies as a result of the monetary easing steps of advanced nations. It’s true that the massive monetary stimulus of advanced economies may affect emerging economies including through capital inflows ... Such spill-over effects had been discussed even before the G20 meeting, and will likely be on the agenda at (this week‘s) meeting too.”
“We must go as far as possible without treaty change and consider whether ... that is necessary. But if it must be, they must be very technical. The idea of a treaty change, which is never popular in Europe, must not be used as a pretext to stop banking union.”
“If necessary we can have one. But it has to be necessary and technical because it’s clear people are not very fond of huge treaty changes; we’ve had a lot in the last years.”
“We want a full banking union and we want it fast.”
“It is logical that some countries like ours adopt a good rhythm, balance between fiscal consolidation, which is a necessity, and also sustaining growth, which is indispensable for our people.”
“We need to find the right balance, the right balance is to say that we must sustain growth but, at the same time, that we must absolutely reduce our deficits and reduce our debt.”
EU‘S OLLI REHN ON U.S., IMF URGING LESS FISCAL RESTRAINT
“They are preaching to the converted.”
“In the early phase of the crisis it was essential to restore the credibility of fiscal policy in Europe because that was fundamentally questioned by market forces.”
“There was no choice. Decisive action was taken. Now as we have restored the credibility in the short-term, that gives us the possibility of having a smoother path of fiscal adjustment in the medium-term.”
“I have been somewhat struck by the perception of the economic and fiscal policy in Europe.”
REHN ON JAPAN‘S STIMULUS EFFORTS
”I can well understand the concern of the Japanese government about the slow growth and deflation, that is why I see the merit of providing economic stimulus to support growth and to exit from the long-lasting deflation that Japan has suffered from.
”However, Japan still faces the challenge of putting together a credible long-term strategy of fiscal consolidation -- I speak deliberately of the long-term -- and deciding on structural reforms that will help boost sustainable growth and jobs creation.
“So I understand these short-term measures to stimulate the economy and tackle deflation, but they do not yet respond to the medium to long-term challenges that Japan faces.”
THARMAN SHANMUGARATNAM, SINGAPORE DEPUTY PRIME MINISTER AND FINANCE MINISTER, ON THE RISE OF EMERGING MARKET NATIONS:
”Let’s not assume that this is now a permanent ascendance. Moving from middle income to upper middle income and high income is not just about macroeconomic policies. It’s not an automatic game of catch-up. It involves profound institutional changes. Profound institutional changes in systems of governance - economic and social. It involves systems of financial governance as well. Profound institutional changes. What happened to create wealthy societies in Europe and the United States and Japan pre-war and in the immediate post-war period is still an aberration in world history. Let’s not assume that we’re now in a world where the emerging markets are on a permanent trajectory of ascendance. The chances are that it’s going to be a multi-polar world but it rests on major institutional reforms in the emerging economies.
BANK OF CANADA GOVERNOR MARK CARNEY ON THE FED‘S GUIDANCE:
“It helps market participants understand not exactly the timing of adjustment of interest rates but the minimum conditions before the Fed even thinks about adjustment of interest rates.”
(Asked whether central banks have the necessary tools for exit strategies from their ultra-easy policies:)
”The tools are there. It hasn’t been done before so I think there’s a need for humility around it and an appropriate caution there.
“It can also, as appropriate, influence the continued path of unconventional policy. If there is a prospect of an exit, if the timing of the exit becomes more clear, it obviously influences the path, magnitude and composition of unconventional policy. At least those are considerations that need to be taken into account by relevant central banks.”
“(The) Cyprus resolution is not a template. And the way in which the two largest banks of Cyprus and the rest of the banking system has been restructured in the way it has, and in the way it should have been, is not a template for other countries, if only because the situation of Cyprus is extremely specific for all sorts of reasons.”
“We’re also seeing the emergence of a three-speed global recovery: those countries that are doing well, those countries that are on the mend, and those countries that still have quite a distance to travel.”
“The three-speed recovery is not the healthiest we could think of ... what we need is a full-speed global recovery.”
“The U.S. managed to avoid the fiscal cliff. It still needs however to fix the pace of its fiscal adjustment. Better quality, less of it upfront, much more well-planned, well-anchored, well-communicated for the future. And this would certainly support the recovery in private demand.”
”Of all the major central banks in the world, clearly the ECB is the one that still has room to maneuver. It will be for them to determine when is the right time to use that space and to potentially reduce interest rates. What in our view is more critically important is to make sure there is fluid transmission between central banks and banks, and amongst banks ...
“There has to be enough strengthening as well as restructuring if need be of banks within the euro-zone regions in particular, as well as the right influx from the top at the right moment. That should hopefully unleash the credit that is so much needed for SMEs and consumers to invest again.”
“We believe considering the situation of the country and the efforts that had been undertaken, the 20 percent unemployment rate at the moment, it’s clearly needed to do fiscal consolidation but we don’t see the need to do upfront, heavy duty fiscal consolidation as was initially planned. Spain needs more time and needs to be able to adjust into its fiscal consolidation efforts it has done already.”
LAGARDE ON EURO-ZONE, JAPAN:
”On the euro area, policymakers have accomplished a great deal over a short period of time. The priority now is to fix frail banking systems and press ahead with banking union.
“In Japan ... the recently announced framework of ambitious monetary easing is, from our point of view, a positive step. But it is not enough. Japan needs more ambitious plans to bring down debt plus structural reforms to shift the economy into a higher gear. That’s the whole plan behind this three-arrows policy mix which the prime minister has described, and we are certainly keen to see the other two arrows into action.”