Global Finance Officials Call for Firmer Policies
IMF Addresses Stability, Currency
Global finance officials agreed yesterday that the International Monetary Fund needs to strengthen and modernize its policies on monitoring exchange rates to ensure their effectiveness as globalization deepens.
Gordon Brown, Britain’s finance minister and the head of the IMF’s policy-steering committee, said the quality and the candor of the surveillance process need to improve to preserve global economic stability.
He said the revision should be carried out in a way that adds “no new obligations” to IMF member countries and takes “an evenhanded approach based on dialogue and persuasion.”
Brown said, “I can assure you that the reform agenda at the IMF is moving forward.”
He spoke in Washington at the end of a day-long session that was part of the spring meetings of the IMF and its sister institution, the World Bank.
The head of the IMF, Rodrigo de Rato, drew attention to the section of the group’s communique that calls for China to gradually improve its exchange rate mechanism.
“Exchange rate flexibility will gradually increase, with attention paid to the value of a basket of currencies,” de Rato said. “Efforts will be made to cultivate the foreign exchange market and deepen reform of foreign exchange administration.”
While seeking new ways to pressure Beijing, U.S. Treasury Secretary Henry M. Paulson Jr. also advocated “bold action” to change the IMF. The organization founded 62 years ago to foster economic stability “no longer looks like the economic world in which we live,” he said.
“Let us be clear: Exercising firm surveillance over members’ exchange rate policies is a core function of the institution,” Paulson said.
Finance ministers from Latin America and Europe endorsed Paulson’s position on currency surveillance.