Transcript of a Press Briefing by Christine Lagarde, Managing Director, International Monetary Fund, at the Conclusion of the Group of 20 Finance Ministers and Central Bank Governors Meeting; February 16, 2013; Moscow, Russia

IMF News, February 16, 2013

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Canonical URL: Transcript of a Press Briefing by Christine Lagarde, Managing Director, International Monetary Fund, at the Conclusion of the Group of 20 Finance Ministers and Central Bank Governors Meeting; February 16, 2013; Moscow, Russia

G-20 adoption of "exchange rate language that is common to all members" is identified as "clearly a policy commitment" and is reflected in "paragraph 3 of the communique."
The meeting produced "dialogue, deliberation, discussions" and was described as "extremely helpful and productive" in addressing exchange rate concerns.
On the question of geopolitical rhetoric: "There has been a lot of talk about a currency war and we have not seen any such thing as a currency war. We have had currency worries, not a currency war."
The G-20 "showed signs of renewed commitment" to IMF governance reform; acknowledgement that the G-20 are "only 20 out of the 188 members of the institution" but have significant influence given their size.
Target for governance/quota outcomes: "hopeful delivery of results before the end of 2013" with parallel work on the quota review and the quota formula review.

The IMF received support from the G-20 for work on:
- the integrated surveillance decision;
- the spillover reports;
- developing work on sovereign debt "looking at those sovereign debts from multiple perspectives," with delivery planned "in the course of 2013" for the G-20 and the IMF.
Governance reform process:
- The Executive Board produced results "late in January" that frame further work.
- The "quota formula review" and the "quota review" will proceed in parallel; the quota review "might very well entail an increase in the quota" to reallocate resources among members.
- The 2010 reform (referenced as "implement the doubling of the quotas under the 2010 reform") and the quota formula review are central to closing the implementation gap.
External Sector Report:
- Work on an External Sector Report "developed in 2012 on a pilot basis" will be continued in 2013 to compare currencies, current account balances, and assess consistency/fair value.
- The Report will include the concept of volatility and aim to identify "excesses and abuses" such as bubbles or "excessive volatility."

The IMF has "slightly amended our guidelines" to account for a combination of macroeconomic policies and possible macroprudential rules in response to "excess or abuse of capital flow movement."
The IMF will develop "(operational) guidelines in the course of this year" to operationalize the new position approved by the IMF Board.
The capital flows work over the "last 12 months" is leading to practical operational guidance; the work is intended to be cooperative and to help identify when measures (including controls) could be appropriate under exceptional circumstances.

Fiscal policy:
- Emphasis on "medium-term goals" and "medium-term anchoring"—fiscal consolidation must be "specific and detailed enough" to reduce uncertainty and backed by political determination.
- "There has to be fiscal consolidation and it has to be at the right pace and it has to be country specific."
- Acknowledgement that "there has been quite a lot of fiscal consolidation over the last few years" and that scheduled consolidation "without sequestration" in the U.S. would be "desirable, not in excess but desirable."
Interaction with monetary policy:
- Fiscal consolidation "often has to go hand in hand with monetary policy" and cannot substitute for it; both should "go in parallel."
- On Europe: recent ECB actions in the prior six months were described as "critical in order to restore confidence" and "fundamental and instrumental in restoring confidence in the zone."
- The European context: underlying inflation is described as "subdued," the "interest rate in the Euro Zone is also clearly higher than in many other regions, including the U.S., the U.K. or Japan," and the OMT exists "but may have to be put to use at some stage."

Repeated characterization: "Zero currency war" — "currency worries, no doubt about it" but "no division, we have seen cooperation."
Appropriate response is "talking together" rather than "talking up, talking down"; emphasis on "cooperation, discipline" and the IMF's role in monitoring and identifying imbalances.
The IMF's role is monitoring, reporting, and recommending responses (including possible capital flow measures and macroprudential steps) rather than endorsing confrontational policies.

United States and Japan:
- Both U.S. and Japanese authorities were described as understanding "that the fiscal agenda is critical."
- Anticipation of debates on sequestration and long-term fiscal plans in the U.S.; IMF stance is continued need for medium-term fiscal consolidation.
- On Japan: question referenced whether G-20 was "inviting the yen to fall"; response stressed coordinated dialogue rather than encouragement of unilateral depreciation.
IMF governance frustration:
- Recognition of a "gap between declared intention" (reform, doubling of quotas, quota formula review) and the difficulty "in closing that gap" — characterized as "hard work" expected to continue through "the end of 2013."

Transcript of a Press Briefing by Christine Lagarde; February 16, 2013; Moscow, Russia.