U.S. Seeks Boost in Monetary Fund Currency Market Surveillance

By Kathryn McConnell
USINFO Staff Writer

Washington - The International Monetary Fund (IMF) needs to boost its surveillance of currency markets and better adapt to the increase of dynamic, emerging economies, says Treasury Under Secretary Timothy Adams.

"We are reaching a critical time on reform of the IMF," Adams told reporters April 12. Reform is needed, he said, to safeguard the institution's "relevance and legitimacy."

Adams spoke the day before a meeting in Washington of the top finance officials of Canada, France, Germany, Italy, Japan, the United States and the United Kingdom. The meeting of the Group of Seven (G7) finance ministers and central bankers precedes the annual joint spring meetings of the IMF and World Bank.

Adams said the IMF "has a unique and serious responsibility for exchange rate surveillance" and should play a stronger role in ensuring that countries do not manipulate the values of their currencies.

The meeting of G7 finance chiefs will include an outreach session with officials from China, Russia, Saudi Arabia and the United Arab Emirates to discuss investment flows from Asia and oil-producing countries, Adams said.

On April 16, U.S. Treasury officials will meet with Chinese finance officials to discuss macroeconomic and financial issues in the two countries, Adams said. That meeting will precede a meeting scheduled for May in China of the U.S.-China Strategic Economic Dialogue.

Adams said China needs to rebalance its economy and adopt a more flexible currency to sustain its growth.

"Creating an efficient and competitive financial sector is a key component of this rebalancing and is critical to ensuring future growth in China as well as the global economy," he said.

The finance leaders also plan to discuss global imbalances in their meeting and in a meeting of the International Monetary and Financial Committee (IMFC) April 14.

Additionally, they will discuss debt sustainability in low-income countries, development progress in Africa, and efforts to counter illicit financing and to promote the "stability and integrity" of the global financial system, Adams said.

He said, the G7 and IMFC will urge other countries to "reinvigorate" the Doha Development Round of global trade negotiations, especially in the area of financial services, which are critical to facilitating economic development.

The IMFC of 24 member countries advises the IMF board of directors.

The finance ministers also will discuss guidelines for creditors, managers of private pools of capital, investors, financial regulators and other market participants to help them address issues associated with the growth and dynamism of hedge funds, Adams said.

The IMF-World Bank meetings run through April 15.

The full text of Adams’ prepared statement is available on Treasury's Web site.