WASHINGTON (Reuters) - Tensions over global currencies will be resolved quietly “in closed rooms” and not through public debate, the head of the International Monetary Fund’s policy steering panel said on Friday.
Youssef Boutros-Ghali, chair of the IMF’s International Monetary and Financial Committee and also the Egyptian finance minister, said exchange rate tensions, which have raised fears of a global round of competitive devaluations, will be discussed by world finance leaders in Washington this weekend.
“The exchange rate issue will be on the agenda, but, typically, it will not be on the public agenda,” he told an internal IMF publication. “These are issues that you solve in closed rooms, and try to find common ground of all the parties involved about how we want to deal with the issue.”
He said exchange rate tensions were a symptom of a broader economic problem.
“Typically, that problem has more than one symptom. We just happened to latch on to the more obvious one, but there are other things that can be done to address the same issue and resolve the same problem,” Boutros-Ghali said. “This will need to be handled quietly and in a spirit of cooperation.”
He said even if countries did not reach an understanding on how to resolve the issue, simply talking about it will help and that the IMF was the place for those discussions.
“The more we discuss the issue, the more we have a better understanding of what the problem is,” he said.
Boutros-Ghali said agreement by countries on how to rebalance growth would take time. “It’s not something that you just walk into a room and resolve. It is something that needs quiet discussions, quiet diplomacy to get things moving,” he added.
Earlier this week, Boutros-Ghali said unless emerging economies feel their voices are heard inside the IMF, the Fund could not be effective in dealing with tough global issues, including tensions over currency exchange rates.
The issue of giving rising economic powers more say in the IMF is also being discussed by finance leaders this weekend.
Reporting by Lesley Wroughton; Editing by Leslie Adler