Rueters Highlights-IMF, World Bank, G-20 Meetings from Stage2Omega

 ”The eventual transition toward the normalization
of monetary policy in the context of strengthened and sustained growth should
be well timed, carefully calibrated, and clearly  communicated. Where
country circumstances allow, medium-term fiscal plans should be implemented
flexibly to take account of near-term economic conditions to support growth and
job creation, while placing government debt on a sustainable track…

“The United States needs to take urgent action to address short-term
fiscal uncertainties. The euro area should build on progress toward banking
union and further reduce financial market fragmentation. Japan should implement
medium-term fiscal consolidation, and structural reforms to invigorate
growth.”

IMFC ON FOREX, PROTECTIONISM,
FINANCIAL REFORMS

“We reaffirm our commitment to refrain from competitive devaluations and
all forms of protectionism. Global financial  reforms, including in the
areas of ‘too-big-to-fail,’international capital standards, cross-border
resolution, derivatives markets, and addressing the potential systemic risks in
shadow banking, need to be implemented promptly and consistently.”

IMFC STATEMENT ON FUNDING
“External financing, including on a precautionary basis, can help
facilitate orderly adjustment. The Fund continues to be prepared to offer
financing to support appropriate adjustmentsand reforms.”

IMFC STATEMENT ON QUOTA REFORM

“We continue to attach the highest priority to the IMF governance and
quota reform to enhance the Fund’s credibility, legitimacy and effectiveness.
We urge all members who have yet to ratify the 2010 reforms to do so without
delay. We remain committed to completing the 15th General Review of Quotas by
January 2014, and urge the Executive Board to agree on a new quota formula as
part of that review.”

SINGAPORE FINANCE MINISTER THARMAN
SHANMUGARATNAM, IMFC  CHAIRMAN, ON SPILLOVERS

“The spillovers that come about from large country policies were uniformly
acknowledged. Everyone knows that these are inevitable consequences as policies
are reset. And there was a consistent view, from the emerging market economies,
that the eventual normalization of monetary policy … as the economies recover
in the West will be a net positive.”

“The key task is to focus on the transition, prepare ourselves well for
this eventual normalization. It’s not imminent but it will happen.”

ARGENTINE ECONOMY MINISTER HERNAN
LORENZINO ON GROWTH OF EMERGING ECONOMIES:

“We consider that there is an excess of generalization in the overall
analysis on the diminishing strength of emerging markets without due
distinction of regions with stronger positions and buffers.

Furthermore, as far as most problems are of a cyclical nature, (emerging
markets and developing countries) as a group will continue to grow at a steady,
sustained and strong speed to remain the driving force of the global
economy.”

CHINA’S DEPUTY CENTRAL BANK GOVERNOR
YI GANG  ON RISKS FROM UNCONVENTIONAL MONETARY POLICIES:

“While unconventional monetary policies helped stabilize growth and
financial markets in advanced economies after major crises, more attention
should be given to the risks associated with the prolonged use and disorderly
exit of such policies.”

ON WHAT TOOLS NEEDED TO DEAL WITH QE
SPILLOVERS:

“A flexible policy stance and enhanced safeguarding measures, including
emergency swap lines, will also be helpful in assisting the economies in facing
the challenges posed by the external environment.”

ON EXCHANGE RATE:

 ”The Chinese authorities remain committed to exchange
ratereform, and will enhance a two-way movement in the renminbi exchange rate
around the appropriate equilibrium level.”

ECB GOVERNING COUNCIL MEMBER JENS
WEIDMANN ON THE WITHDRAWAL OF MONETARY SUPPORT:

“Central banks cannot simply keep stepping on the monetary gas pedal for
eternity. A firming in economic conditions in developed countries makes it more
probable that there will be a gradual withdrawal of unusually expansive
monetary policy.”

GERMAN FINANCE MINISTER WOLFGANG
SCHAEUBLE ON SPILLOVERS:

“Accommodative monetary policies continue to support the global recovery.
It would be wise to prepare for the unavoidable transition to more normal
monetary conditions, while keeping a
watchful eye on risks arising in the current low-interest rate environment.”

ON IMF REFORM:

 ”U.S. Congress ratifying the last reform is the prerequisite for
taking the next step. Then we Europeans will feel the heat a bit more because
we have to provide our second seat.”

“The other question is the quota formula, and we will continue to insist
that an economy’s openness should be an important part of the reform.”
  ”If you want sustainable global growth, you must ask for more
transparency from economies.”       

MALAYSIA CENTRAL BANK GOVERNOR ZETI
AKHTAR AZIZ ON UNCONVENTIONAL POLICIES:

 ”The unconventional policy measures adopted by the major advanced
economies were effective at the height of the global financial crisis. Market
functioning was broadly restored, and tail risks declined significantly.
Nonetheless, evidence that the measures have resulted in the resumption and
reinvigoration of growth has not yet to be forthcoming.”

ON MANAGING NORMALIZATION OF MONETARY
POLICY:

“In this extraordinary (monetary policy environment), the IMF’s policy
toolkit needs to be expanded to include policy tools for (emerging markets and
developing economies) to manage the challenges and implications of the
continued implementation of such policy measures, as well as the eventual exit
of these measures.”

SAUDI ARABIAN MONETARY AGENCY GOVERNOR
FAHAD ALMUBARAK’S STATEMENT TO THE IMFC ON THE U.S. BUDGET IMPASSE:

 ”Agreements on increasing the debt ceiling and on a continued
resolution to fund government agencies should be reached soon. Any delay in
these areas could impact market confidence and undercut growth. In view of
these developments, the argument for a strong medium-term fiscal consolidation
plan to replace the sequester is more valid than ever.”

ON ARAB ECONOMIES:

“Arab countries in transition … continue to face importantchallenges,
including restoring stability and growth to be in a position to offer job
opportunities, particularly for the educated youth. In this process, these
countries continue to deserve strong support from the international community.
While these countries are benefiting from strong financial support from Saudi
Arabia and other donors in the region, we encourage other donors to step up
their contributions. We call on the Fund
to fulfill its catalytic role and remain engaged and tailor its support to the
need of each country.”

RUSSIAN FINANCE MINISTER ANTON
SILUANOV ON ADVANCED ECONOMIES:

“The sustainability of renewed growth in advanced economies is questioned
by many analysts. Indeed, this growth is taking place against the backdrop of
unprecedented monetary stimulation. In effect, we are witnessing a return to
the old model of growth based on low interest rates and rapid credit expansion,
which led to the global financial crisis in the first place.”

ON FINANCIAL RISKS:

“We are concerned that the low interest rates environment already in place
for many years is leading to the emergence of new financial risks, since the
search for yield makes investors buy risky low-quality assets.”

ON FINANCIAL TURMOIL FROM MONETARY
EXIT:

“We expect that the approaching exit from unconventional monetary
policies and normalization of interest rates will be accompanied by
considerable turmoil in the financial markets. The assumption that the asset
price correction that began this summer has already been largely completed does
not seem to be plausible to us.”

ON UNCONVENTIONAL RESPONSE FROM
EMERGING MARKETS:

“It is difficult to say at this stage what sort of conclusions (emerging
market) countries will draw from the recent developments. Perhaps, next time
they may want to respond to unconventional monetary policies in advanced
economies withsome kind of unconventional policies of their own.”

LITHUANIA MINISTER OF FINANCE
RIMANTAS SADZIUS ON FOSTERING STABLE GROWTH:

“To foster stronger growth and employment, monetary support must be
complemented by credible medium-term fiscal policies and structural reforms.
History has shown that long periods of easy money can contribute to the
build-up of risks. The IMF should carefully monitor all such
developments.”

SPANISH ECONOMY MINISTER LUIS DE
GUINDOS WITHDRAWAL OF US MONETARY STIMULUS:

 ”Monetary conditions should remain accommodative as long as
needed and, in the case of the United States, exiting from monetary stimulus,
when appropriate, needs to be clearly and timely communicated as well as
mindful of its spillovers in other countries.”

SOUTH KOREAN DEPUTY PRIME MINISTER
AND MINISTER OF STRATEGY AND FINANCE OH-SEOK HYUN ON WITHDRAWAL FROM
UNCONVENTIONAL MONETARY POLICY (UMP):   

 ”While exit from UMP should suggest a strengthening in key advanced
economies…a disorderly withdrawal could cause significant disruptions to
financial markets and lead to large abrupt outflows of capital. Economies can
prepare for the reversal of capital flows associated with exit by embracing flexible
policy settings and building adequate fiscal and external buffers to guard
against disorderly adjustments.” 

“For UMP central banks, clear and effective communication will be critical
to the success of tapering as evidenced by financial markets’ heightened
sensitivity to announcements on monetary policy earlier this year.”

ON IMF QUOTA REFORM:
“Maintaining the legitimacy, credibility and effectiveness of the IMF
is only possible when governance and quota reforms keep pace with the shift in
the relative economic weights of its members.”

GERMAN FINANCE MINISTER WOLFGANG
SCHAEUBLE  ON IMF REFORM:
“The usual governance questions are before the IMF. The U.S. Congress must
also actually (progress) with the ratification of the last round to give the
starting signal for the next step.”

AUSTRALIAN TREASURER JOE HOCKEY ON
IMF OUTLOOK:
“There are high expectations for us as the chair of the G20 next year that
we will have a simple agenda, not a complicated or overly ambitious agenda, and
that we will focus on real outcomes.”

JAPAN DEPUTY PRIME MINISTER AND
FINANCE MINISTER TARO ASO ON FED TAPERING:

“The U.S. tapering of quantitative easing could have potential spillover
effects on emerging market economies; this would need to be properly addressed.
It is of foremost importance that emerging market economies steadily implement
appropriate macroeconomic policies, structural reforms, and appropriate micro-
and macro-prudential supervision in order to make their economies more
resilient to external shocks.”

ON IMF REFORM:
“To enhance its legitimacy, effectiveness and credibility, it is
essential that the Fund make continuous efforts to complete its own governance
reforms, including the quota review.”

“Japan believes that due consideration to the records of financial
contributions, and to the quota shares of emerging and developing countries,
are mutually compatible issues.”

ITALY MINISTER OF ECONOMY AND FINANCE
FABRIZIO SACCOMANNI ON IMF REFORM:

“Considering the tight deadline of January 2014 agreed at the political
level, it is of the essence to deliver on our commitments, including the
agreement on a quota formula within the context of the 15th General Review of
Quotas. In this respect, a balanced and comprehensive package – that deals with
all the issues in the quota formula – and a spirit of compromise by the whole
membership are needed.”

EUROPEAN CENTRAL BANK’S EWALD NOWOTNY
STATEMENT TO THE IMFC ON THE U.S. BUDGET IMPASSE:

 ”Prolonged uncertainty about the U.S. budget process has a
potentially large disruptive impact throughout the world. The exit from the
Fed’s unconventional monetary policy has been put on hold as the recovery and
employment gains are yet to prove their durability. Policy uncertainty is yet
again at the forefront in the U.S. and threatens the promising private
sector-led rebound in activity.”

ON U.S. FEDERAL RESERVE POLICY
COMMUNICATIONS:

“We also encourage the U.S. Federal Reserve to engage international
dialogue in order to minimize unwarranted negative spillovers from the exit of
its unconventional monetary policy measures on other countries.”

ON THE RISK TO EMERGING MARKETS FROM
FED POLICY TIGHTENING:
“The policymakers in countries under market pressure should use the delay
in the Fed’s tapering to address these imbalances in order to be better
prepared for the eventual monetary tightening in the U.S…Structural reforms
and flexible policy frameworks including exchange rates will be essential,
while capital flow management measures, FX interventions and prudential
policies can at most smooth the adjustment process.”

“Global financial stability is a shared responsibility. The Fed should
therefore clearly communicate the path of its intended policy actions to
minimize negative spillovers which could undermine the policy adjustment efforts
of emerging markets.”

SOUTH AFRICAN FINANCE MINISTER PRAVIN
GORDHAN ON RISKS TO GLOBAL ECONOMY FROM U.S. FISCAL POLICY, FED EXIT

  “Uncertainty regarding the unwinding of unconventional monetary
policies and the threat of potentially devastating budgetary challenges
continue to pose serious risks to the global economy. In particular, clarity in
the communication of  an exit strategy regarding the withdrawal of
monetary stimulus is critical in minimizing the negative impact thereof.”

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