–Adds Trichet Comments on Exchange Rate Flexibility, Growth, Inflation

BASEL, Switzerland (MNI) – Senior officials from national central
bank across the globe, meeting here today, said unanimously that they
are not pursuing weak currency policies, European Central Bank President
Jean-Claude Trichet said at a press conference that followed the Global
Economy Meeting, which he heads.

Central bankers gathered here did not discuss the idea of returning
to the gold standard, which was suggested in a recent newspaper article
by World Bank President Robert Zoellick, Trichet said.

“I have to say that all participants mentioned in fact that they
were not pursuing weak currency policies,” Trichet stressed. “That is of
course something that is very important: Absolutely no participants said
they were pursuing weak currency policies.”

Trichet also reiterated that central banks “are attached to
avoiding excessive volatility” in foreign exchange markets and avoiding
“misalignments that we see as very, very counterproductive to global
growth and stability.”

“I felt that the colleagues were very much in line with the present
consensus that involves the necessity to have progressively more
exchange rate flexibility as was mentioned in Toronto,” he continued.

The ECB president would not be drawn into a debate about the merits
of action taken by individual central banks — namely, the recent round
of quantitative easing by the U.S. Federal Reserve — saying that each
central bank acts in a manner that is appropriate to its particular
mandate.

He evaded any direct comment on actions taken by the Fed: “I do not
want to respond to anything that is peculiar to a particular central
bank. It is not the rule of the game.”

All central bankers share a “unity of purpose” in anchoring
inflation expectations, Trichet said. Furthermore, there is a “very,
very close definition of price stability in advanced economies,” which
is around 2%, the goal pursued by the ECB, he said.

Trichet told reporters that central bankers had not discussed the
proposal by Zoellick for returning to a modified gold standard, and he
declined to comment on its merits.

Turning to the economic outlook, Trichet said that all countries
are expected to grow but the recovery remains “uneven,” with “a
signicant difference between the emerging economies and advanced
economies.”

“There is a degree of uncertainty that is the mark of the present
time,” Trichet added. “We have experienced this uncertainty in the past.
I would say that colleagues…certainly share this sentiment that we
have to accept that we are in a universe where there is still
uncertainty.”

“We have to remain permanently alert,” the ECB President said. He
also reiterated that structural reforms are needed in all economies,
noting that potential growth, especially in advanced economies, was not
as high as it could be.

Trichet said there is a “very strong consensus among the community
of central bankers” on the package of banking reforms known as Basel III
and “this is very important.”

Trichet’s comments come amid heightened tensions on currency
markets after the U.S. Federal Reserve last week announced it would
purchase $600 billion in US Treasuries, drawing widespread criticism and
increasing concerns that the world is approaching a “currency war.”

Germany’s Finance Minister Wolfgang Schaeuble blasted the Fed’s
move Friday, saying it was akin to currency manipulation and was
“inconsistent” with U.S. calls on China to stop manipulating the yuan.
Schaeuble said U.S. financial policy was “in deep crisis.”

The Chinese have also criticized U.S. policy in recent days.

Experts think it is unlikely that the leaders will reach an
agreement on currencies in Seoul next week.

–Frankfurt bureau; +49-69-720142, frankfurt@marketnews.com

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