–Not Sure G20 Best Forum To Talk About Currencies

By Yali N’Diaye

WASHINGTON (MNI) – China’s growth pattern is clearly showing signs
of evolution, coinciding with recommendations from the International
Monetary Fund in particular, France Finance Minister Christine Lagarde
said Friday.

Following a presentation at the Carnegie Endowment for
International Peace of the French priorities when the country assumes
the 12-month presidency of the G20 starting in November, Lagarde was
asked about current account surpluses of countries such as China and
whether this was a concern.

In the case of China in particular, she said, “We see that the
pattern of growth is beginning to change.”

Looking at domestic consumption and regional hubs that are
emerging, “you clearly see a shift and an evolution,” she continued,
adding, “That coincides with the recommendations” made by the IMF at the
last meeting.

Still, Lagarde stopped short of taking any stance on currencies.

In fact, the only clear stance she took from the very beginning of
her presentation was that she had “decided” not to talk about
currencies. And she stuck to her word, so much so that this
reticence in itself was particularly noticeable at a time of increasing
fears of a “war” of currency debasement.

Lagarde even expressed doubt the G20 was the appropriate place to
discuss foreign exchange issues, perhaps a sign countries have already
agreed to avoid the issue publicly altogether at a time of currency
‘war.’

“I don’t know what the ideal forum would be to actually discuss
effectively currencies,” Lagarde said. “I’m not sure that 20 is the
absolute” right place.

As far as France is concerned, there is no “preset” goal, she
added.

On the international financial system more generally, Lagarde said
one of the focuses of the French presidency will be to deliver in terms
of regulation and supervision.

She reaffirmed her support for a financial transaction tax, which
she jokingly suggested to rename “financial transaction contribution.”

She said a recent study by the IMF comforts her view, even if the
IMF suggests to narrow the tax base to foreign exchange transactions.

France will also focus on commodity prices and the organization of
the commodity market, with an emphasis on derivatives markets.

And when discussing financial safety net issues, she said, the
European financial facility — an amazing agreement despite tensions
that emerged during the talks — could be considered as a possible
model.

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: MGX$$$,M$U$$$,M$$FX$]