UPDATE 1-Canada's Carney wants G7 FX commitment to expand to G20

Tue Feb 12, 2013 12:07pm EST
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* Carney says will hold G7 members to forex position

* Says G7 commitment must be enlarged to include G20 members

* Sees G20 discussion on Japan's monetary policy

* Says it is natural for monetary policy to influence FX

By Randall Palmer

OTTAWA, Feb 12 (Reuters) - The Group of Seven leading industrialized nations must go into this weekend's G20 meetings forcefully pressing major emerging economies to adopt flexible foreign exchange rates, Bank of Canada Governor Mark Carney said on Tuesday.

Carney, who will change jobs and become the governor of the Bank of England in July, also said it was critical that no G7 members use monetary policy to target exchange rates. His comments come after Japan's new government pressed for an aggressive loosening of monetary policy, which has caused the yen to weaken sharply.

Carney was testifying to a Canadian House of Commons committee about Canada's monetary policy, hours after the G7 issued a statement on flexible forex regimes.

"We signed a statement, the minister of finance and I, ... which reaffirmed the commitment of the G7 to ensure that monetary policy is focused on domestic objectives, not on targeting exchange rates. And we hold the members of the G7 to that long-standing position. It is extremely important," he said.   Continued...