Geithner says exchange rates key to global monetary problems

Source: http://www.reuters.com/article/2011/03/31/g20-geithner-china-idUSBGNVEE70120110331

NANJING, China, March 31 – Inconsistency in exchange rate policies is the most important problem in the international monetary system, with some countries running tightly managed currency regimes that harm the global economy, U.S. Treasury Secretary Timothy Geithner told a G20 meeting on Thursday.

The solution to the problem is not complicated, he said. Rather than a new treaty or new institution, all that is needed is national action, Geithner said.

“We have been engaged in a careful multilateral effort in the G20 to establish stronger norms for exchange rate policy,” he said, according to a prepared text of his remarks.

He was addressing a seminar of the Group of 20 wealthy and developing economies in the eastern Chinese city of Nanjing. He was on a panel slated to discuss the current state of the international monetary system and its shortcomings.

Geithner also said that he supported reforms to change the composition of the Special Drawing Right, a unit of account used by the International Monetary Fund.

“Over time, we believe that currencies of large economies heavily used in international trade and financial transactions should become part of the SDR basket, and that to achieve this objective, the concerned countries should have flexible exchange rate systems, independent central banks, and permit the free movement of capital flows,” he said.

Emphasising that the solution to the international monetary system’s problems rest at the national level, Geithner said he recognised that United States was working to address policy failures that caused damage in the global financial crisis.

“We are committed to … fiscal reforms that will reduce deficits as a share of the economy to three percent over the next several years so that we stabilize the ratio of debt to GDP at a level that will not threaten future economic growth,” he said. (Reporting by Simon Rabinovitch; Editing by Ken Wills)

This entry was posted in Industry News and tagged , , . Bookmark the permalink. Comments are closed, but you can leave a trackback: Trackback URL.
Live Chat