WASHINGTON (Reuters) - Greater currency flexibility from emerging economies is needed to spur global growth, a senior U.S. Treasury official said on Wednesday.
“Global recovery has been held back by a lack of demand growth in many of the major advanced economies, and by resistance in many emerging economies to moving more quickly toward the currency flexibility needed for a durable rebalancing,” Lael Brainard, Treasury undersecretary for international affairs, said during a conference.
The United States has long pressed China to let the yuan rise more quickly in order to boost demand in the world’s second-largest economy. It is also calling on the European Union to slow down government austerity measures as the region enters a sixth consecutive quarter of contraction.
”You cannot cut your way to growth,“ Brainard said. ”Europe has established a lot of credibility on the reform agenda...
“(But) there is capacity within the euro area, simply through boosting the contribution of private demand in surplus economies, to help ease the adjustment, which has really come through compression of demand in some of the peripheral economies.”
Brainard was speaking during a conference of the Bretton Woods Committee, which works on strengthening the IMF and World Bank, known as the Bretton Woods institutions for the place in which they were founded.
Reporting by Margaret Chadbourn and Anna Yukhananov, editing by Chizu Nomiyama