Central bank deputy tells IMF to increase surveillance of industrialised economies
Agencies in Washington 13 October 2008
A top official of China’s central bank has criticised rich nations for the problems in the global financial system and called on them to “shoulder the responsibility” of preventing more fallout.
The comments came as the Group of 20 developing and rich nations met in Washington, where they pledged to use all means at their disposal to battle the financial crisis.
Yi Gang , deputy governor at the People’s Bank of China, urged the International Monetary Fund to increase its surveillance of developed nations where he said “weak financial-policy discipline” was the cause of problems.
“The major reserve-currency-issuing countries should shoulder the responsibility for preventing further spillovers and minimising shocks to other countries,” Mr Yi told a meeting of the IMF.
The US and euro zone are by far the largest currency-reserve-issuing countries in addition to Switzerland, Japan and Britain.
“Under the current international monetary system, the lack of effective surveillance of reserve-currency-issuing countries and their weak financial-policy discipline have resulted in excess global liquidity and disorderly capital flows,” Mr Yi said.
The PBOC vice-governor said this had caused difficulties for other countries in their bid to preserve macroeconomic stability and boost growth “while posing serious risks for global economic and financial stability”.
“The fund [IMF] must draw lessons from the crisis and take corrective measures to enhance its surveillance over the developed countries, especially the reserve-currency-issuing countries,” he told the IMF’s international monetary and financial committee.
The central government had the biggest foreign-exchange reserves in the world of US$1.8088 trillion by the end of June.
China’s double-digit economic growth is also highly dependent on exports to the United States and the euro zone, and Mr Yi pointed to a “much worse than expected” impact of the financial crisis on the real economy.
“The deepening and widening of the US financial crisis has triggered a major global slowdown and escalating uncertainty,” Mr Yi said.
His concerns were echoed by the president of fellow G20 nation Brazil. President Luiz Inacio “Lula” da Silva said developing countries needed “to learn from this crisis to construct a new world economic order”.
“What happened is that some people acted like they were teenagers with failing grades on their report cards, wanting to hide them from their parents,” Mr da Silva said.
At the G20 meeting in Washington, a statement said members were “committed to using all the economic and financial tools to assure the stability and well functioning of financial markets”.
It said the member nations also agreed to ensure that measures taken to ease the crisis “are closely communicated so that the action of one country does not come at the expense of others or the stability of the system as a whole”.
The G20, which includes emerging giants Brazil, Russia, China and India alongside the Group of Seven industrialised nations, gathered for the special meeting called by Brazil, the group chair, and US Treasury Secretary Henry Paulson on the crisis.
The G20 said members “stressed their resolve to work together to improve the regulation, supervision and the overall functioning of the world’s financial markets”.
Given the global impact of the crisis, there had to be international co-operation to bring it under the control, they said.
Mr Yi said China’s economic growth might slow to 10 per cent this year and 9 per cent in 2009 from 11.9 per cent last year. “It is our intention to make economic growth slow a little,” he told a group of investors in Washington. “We hope it’s a smooth process.”
China would emphasise domestic demand, particularly in the service industry, Mr Yi said. The country’s banking sector was healthy and had ample liquidity, he added.
“We will try our best to see what we can do to help the global financial crisis.”
China’s fear of inflation would ease; he said Consumer Price Index inflation “will drop significantly next year to a more comfortable level. September PPI [Producer Price Index] inflation will also come down.”
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Beijing Banker Blames Turmoil on West
Central bank deputy tells IMF to increase surveillance of industrialised economies
Agencies in Washington
13 October 2008
A top official of China’s central bank has criticised rich nations for the problems in the global financial system and called on them to “shoulder the responsibility” of preventing more fallout.
The comments came as the Group of 20 developing and rich nations met in Washington, where they pledged to use all means at their disposal to battle the financial crisis.
Yi Gang , deputy governor at the People’s Bank of China, urged the International Monetary Fund to increase its surveillance of developed nations where he said “weak financial-policy discipline” was the cause of problems.
“The major reserve-currency-issuing countries should shoulder the responsibility for preventing further spillovers and minimising shocks to other countries,” Mr Yi told a meeting of the IMF.
The US and euro zone are by far the largest currency-reserve-issuing countries in addition to Switzerland, Japan and Britain.
“Under the current international monetary system, the lack of effective surveillance of reserve-currency-issuing countries and their weak financial-policy discipline have resulted in excess global liquidity and disorderly capital flows,” Mr Yi said.
The PBOC vice-governor said this had caused difficulties for other countries in their bid to preserve macroeconomic stability and boost growth “while posing serious risks for global economic and financial stability”.
“The fund [IMF] must draw lessons from the crisis and take corrective measures to enhance its surveillance over the developed countries, especially the reserve-currency-issuing countries,” he told the IMF’s international monetary and financial committee.
The central government had the biggest foreign-exchange reserves in the world of US$1.8088 trillion by the end of June.
China’s double-digit economic growth is also highly dependent on exports to the United States and the euro zone, and Mr Yi pointed to a “much worse than expected” impact of the financial crisis on the real economy.
“The deepening and widening of the US financial crisis has triggered a major global slowdown and escalating uncertainty,” Mr Yi said.
His concerns were echoed by the president of fellow G20 nation Brazil. President Luiz Inacio “Lula” da Silva said developing countries needed “to learn from this crisis to construct a new world economic order”.
“What happened is that some people acted like they were teenagers with failing grades on their report cards, wanting to hide them from their parents,” Mr da Silva said.
At the G20 meeting in Washington, a statement said members were “committed to using all the economic and financial tools to assure the stability and well functioning of financial markets”.
It said the member nations also agreed to ensure that measures taken to ease the crisis “are closely communicated so that the action of one country does not come at the expense of others or the stability of the system as a whole”.
The G20, which includes emerging giants Brazil, Russia, China and India alongside the Group of Seven industrialised nations, gathered for the special meeting called by Brazil, the group chair, and US Treasury Secretary Henry Paulson on the crisis.
The G20 said members “stressed their resolve to work together to improve the regulation, supervision and the overall functioning of the world’s financial markets”.
Given the global impact of the crisis, there had to be international co-operation to bring it under the control, they said.
Mr Yi said China’s economic growth might slow to 10 per cent this year and 9 per cent in 2009 from 11.9 per cent last year. “It is our intention to make economic growth slow a little,” he told a group of investors in Washington. “We hope it’s a smooth process.”
China would emphasise domestic demand, particularly in the service industry, Mr Yi said. The country’s banking sector was healthy and had ample liquidity, he added.
“We will try our best to see what we can do to help the global financial crisis.”
China’s fear of inflation would ease; he said Consumer Price Index inflation “will drop significantly next year to a more comfortable level. September PPI [Producer Price Index] inflation will also come down.”
Agence France-Presse, Bloomberg
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