RPT - G7 MEETING Officials call on IMF to step up exchange rate monitoring
(Repeating to clarify a fourth of US deficit is with China in 7th para)
WASHINGTON (XFN-ASIA) - Group of Seven finance ministers urged the IMF to tighten its surveillance of economic policies in member countries, particularly those affecting exchange rates.
"We supported the strengthening of IMF surveillance, including through increased emphasis on the consistency of exchange rate policies with domestic policies and a market-based international monetary system and on the spillover effects of domestic policies on other countries," the G7 said in a statement following a meeting here.
"We support a new remit for bilateral and multilateral surveillance by the IMF."
The US has long argued for the International Monetary Fund to pay closer attention to exchange rate practices in member countries, notably those that could have a destabilizing influence on the global economy.
Washington for example has been pressing China to ease its currency policies, contending that an artificially undervalued yuan has given Chinese products an unfair competitive advantage in global markets.
In their statement, ministers from the UK, Canada, France, Germany, Italy, Japan and the US called on China to adopt a more flexible exchange rate policy as a means of redressing global economic imbalances.
The US has amassed a huge trade deficit, of which a fourth is with China.
To finance the shortfall, the US depends on foreign capital inflows, and economists fear that if those flows were to dry up the dollar would weaken, the Federal Reserve would be forced to raise interest rates and global growth would slow.