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Summit News

Russia to push for more reform in G20

MOSCOW (Reuters) - Russia is worried that momentum for financial reform among major nations is slowing, so it will push for tighter regulation and closer coordination of economic policies, a top government aide said on Tuesday.

The Kremlin's top economic aide Arkady Dvorkovich talks to Reuters in Moscow September 15, 2009. REUTERS/Sergei Karpukhin

Leaders of the Group of 20 nations meet in the U.S. city of Pittsburgh on September 24-25 to discuss the recovery from the global credit crisis. At their last summit in April, they committed the group to reforms designed to speed the recovery and prevent any repeat of the crisis.

But Arkady Dvorkovich, a key economic adviser to the Kremlin, said the political will to make difficult changes in the G20 was fading as the economic climate improved.

“The most important thing is to ensure that the summit’s decisions are wholly fulfilled,” Dvorkovich said in an interview at the Reuters Russia Investment Summit.

“Now we see that some countries are already relaxing in relation to different elements of these plans and doubting: do we need to do this if everything is already alright?”

Dvorkovich said momentum to reform regulation of the financial industry -- for example, through introducing a single, global set of accounting standards -- was slowing as countries disagreed over details.

Russia is also concerned that the global recovery could falter if big economies, such as the United States, the euro zone, China and Japan, unilaterally start to wind down expensive stimulus policies put in place during the crisis.

“We want it to be confirmed once more that we are all continuing anti-crisis policies, not immediately starting to unwind our budget and monetary stimulus.”

In addition, as an emerging market economy, Russia is keen for such economies to obtain a greater role in global institutions such as the International Monetary Fund (IMF).

Agreement must be reached “so that leaders do not have to meet four times year only to once again give a political signal -- come on guys, agree at last,” Dvorkovich said.

“We want to leave Pittsburgh with a concrete number on vote distribution (in the IMF). I know that the Americans want the same, so here we have full agreement,” he said.

But there has been disagreement over the distribution. Brazil, Russia, India and China propose a 7 percent shift in IMF quotas in favor of emerging markets, to give them around half the votes. The United States suggests a 5 percent shift.

RESERVED ON DOLLAR

Earlier this year, Russia joined China in pressing for debate among G20 countries over how the world could reduce its reliance on the U.S. dollar as central banks’ top reserve currency.

In the last few weeks, however, officials have indicated that issue may not be a priority for Russia in the short term. Deputy Finance Minister Dmitry Pankin said on Monday that other issues would be more important at the Pittsburgh summit.

“Of course there will be some discussion about this, possibly. But now I see that maybe the top priority of Pittsburgh will not be discussion of reserve currencies -- there are more urgent things,” Pankin said, citing coordination of policies among countries and financial regulation.

Dvorkovich said Russia remained interested in the currency issue, which would continue to be discussed at international meetings of finance officials. However, he stressed that Russia was not trying to undermine the dollar.

“We never proposed replacing the dollar with another reserve currency...We hope the global economy will grow and there will be enough space for new (reserve) currencies -- they will take a part of the growing pie, not something that already exists.”

Earlier this year, Russian officials suggested the rouble might become a reserve currency. But Dvorkovich played down this idea, partly because of the relatively small size of Russia’s debt market.

“A reserve currency can exist when there is a large market in financial instruments denominated in that currency. In today’s world that is first of all debt instruments,” he said.

“To have debt instruments you need debts, and thus you need deficits. Can we, in this context, let the rouble lay claim to the role of a reserve currency if we don’t always want to have a deficit?”

Editing by Andrew Torchia

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