WASHINGTON, Oct 10 (Reuters) - The following are highlights from the International Monetary Fund and World Bank meetings on Friday in Washington, where finance ministers and central bankers from around the globe are gathered.
Many of the comments come from texts that were prepared for delivery to the IMF's steering committee, the International Monetary and Financial Committee, on Saturday.
"Most likely from early next year there is the possibility of the Federal Reserve beginning the process of normalization. However, one thing we learn from history: if the Fed begins the process of normalization of interest (rates), that means not only one time 25 bp in history it never stops just once, so there should be real process. So ... the impact of the Federal Reserve policy on the U.S. economy and the global economy should be very closely watched. Of course the spillover issue should be given high consideration ...
"It's a very crucial time that communication should be more emphasized and that policy be transparent and let the market understand what will happen and what the spillover impact will be to other countries, particularly emerging economies
"It's time we work together, particularly G20 members, and policy coordination, cooperation becomes really more important."
"About the dollar, certainly everybody in G20 agrees monetary policy, that's toward domestic economic policy rather than exchange rate impact. However if there's a fight against the normalization of interest (rates) due to the risk of deflation in the EU particularly we should see in the near future and maybe in the next two years policy coordination become more important."
"What is needed globally is a comprehensive set of both macroeconomic and structural policies that forcefully support global demand. It is especially incumbent upon countries with external surpluses and fiscal flexibility to bolster their support for global adjustment."
"Significant macroeconomic and financial headwinds persist, including from a prolonged period of excessively low inflation. European leaders should focus on recalibrating policies to address persistent demand weaknesses in the near-term and boost potential growth over the medium- to long-term; demand and structural supply side reforms should go hand-in-hand to catalyze stronger growth."
"The Bank of Japan's monetary policy is breaking the deflationary cycle and supporting growth; however, policymakers need to carefully calibrate the pace of overall fiscal consolidation and to move decisively to implement requisite, growth-boosting structural reforms."
"It is critical that Chinese leaders implement reforms that move the country toward a market-determined exchange rate and address financial sector risks."
"A (currency) depreciation works, on the one hand, positively on exports and, on the other hand, it has a positive effect on the inflation rate, which is currently markedly below our goal."
"We see absolutely no reason to soften them ... if it was the case that a country with a 4.4 percent deficit was the world leader in growth, then one could discuss whether we were on the right path. But France has a lower growth forecast than Austria despite the gigantic deficit that's been built up."
"Growth and jobs is always a key topic. That's been the issue all day and will be the issue tomorrow too, and again on Monday at the ECOFIN (Economic and Financial Affairs Council). There are different models and approaches; the prevailing opinion here is that the question of extra investment has less to do with a lack of available resources than with a lack of projects."
"What gives everyone encouragement is that the countries that are facing challenges, or the economies that are facing challenges in the case of Europe, actually have action plans, or action plans are being developed, to respond to the challenges."
"I think they're very aware of the necessity to have structural reform in Europe ... because fiscal policy has limited capacity, monetary policy has limited capacity... I think there is a recognition that Europe can get better, but it does need to make the decision, is it going to deliver that structural reform?"
"The IMF and a number of member countries stand ready to do whatever is necessary to help the Ukraine through some of the economic challenges. Ukraine has to help itself as well, that's part of the equation."
"I'm encouraged (by) the fact that the policy proposals for reform that I have seen out of China, which will be revealed in the Brisbane summit, illustrate the fact that China has a good story to tell and is going about the job of implementation."
"The normalization of monetary policy in the U.S. will inevitably lead to higher interest rates and this could result in short-term capital movements with potential adverse effects on financially open (emerging market and developing countries). But EMDCs are in a relatively stronger position than in earlier periods of financial distress to withstand the tremors from possible capital flow reversals."
"We should try to formulate a new growth deal for Europe."
"Some say let's do more investment, others let's do more budget discipline and structural reforms are left in the middle. If we connect these three, it could be a strong mechanism."
"There is no reason for this gloominess about Europe. Those countries that have actually implemented the strategy and done the reforms, have returned to growth, in southern Europe, in the Baltics, in Ireland. Which once again proves that reforms do not hurt growth, but help recovery quite quickly."
"There is no point in discussing exchange rates. The U.S. and Europe are in different phases of economic recovery, the U.S. is tapering and considering a rise in interest rates maybe next year and in Europe we are still talking about QE and a very accommodative approach."
"How was that time used? It was not used. So we should not do this again."
"I don't expect debt sustainability for Greece to become a problem... Greece has done very well (on its bailout), at a high price, but they exceeded expectations."
"Public debt and deficits remain too high in many advanced economies, including the UK, and the task of fiscal consolidation is not yet completed. The importance of credible, medium-term frameworks for fiscal discipline that can anchor markets' confidence remains a priority."
"The biggest risk to the global economy at the moment, certainly the biggest risk to the UK economy at the moment is the risk of the euro zone falling back into recession and into crisis."
"Once again, they are under the microscope. ... It's very clear the focus is on them, on their collective efforts to make sure they have fiscally credible plans, that they have supportive monetary policy and that they have some real economic structural reform plans that are credible. So I think they know they've got some questions to answer to the rest of the world."
"If you've created a whole set of rules in Europe, in the euro zone, to demonstrate your budget responsibility and your fiscal discipline, you can't then go breaking rules at the first test."
"I'm skeptical that it seems to be in all environments there are certain people who think the answer is more public expenditure. I question that. Second, when it comes to investment in capital, in infrastructure and the like, I would question whether there is such a thing as a free lunch here... Things have to be paid for."
"I'm certainly supportive of Prime Minister Abe's 'three arrows,' and I think what we all want to see, is we want to make sure that third arrow of economic reform, which is a challenge not just in Japan, but in Britain, and America, and the rest of Europe, is fired."
"The current weakening in (euro zone) economic momentum may postpone somewhat more the resumption in private investment, which is also negatively affected by heightened geopolitical risks."
"Steadfast implementation of fiscal consolidation in a growth-friendly manner and determination in structural reform efforts should contribute to supporting business and consumer confidence going forward."
IMF MANAGING DIRECTOR CHRISTINE LAGARDE, IMF PLENARY SESSION
"There is too little economic risk taking, and too much financial risk taking. ... Risks are more concentrated - the top ten global asset management firms now control a whopping $19 trillion. This is larger than the world's largest economy."
"2015 is shaping up to be a make-or-break year. If we miss this chance, then we are failing the world's poorest people, the generations to come, and the planet."
"The decline in crude prices was not caused by fundamentals alone; some of it has been due to speculative trading by money managers which had sent prices to new highs not long ago, as well as the strengthening U.S. dollar which impacts dollar-denominated commodities such as crude."
"As regards monetary policy, the euro area needs more vigorous stimulus ... Although the output gap in Japan has closed, further quantitative easing is still needed to secure a lasting break with deflation and offset the drag on demand from fiscal consolidation."
OBAID HUMAID AL TAYER, FINANCIAL AFFAIRS MINISTER OF UNITED ARAB EMIRATES, IN IMFC STATEMENT
"Without concerted policies in major economies, the pick-up in growth may again fall short of expectations in spite of the easing of both financial conditions and the pace of fiscal consolidation. In this regard, we appreciate the recent supportive measures by the ECB to tackle low inflation and address fragmentation, including through a reduction in policy rates and targeted easing."
"Where fiscal space exists, it may be used to further support growth through productive investments, for example in public infrastructure, while staying within credible medium-term frameworks."
"Asset prices have increased further, especially at the riskier end of the spectrum. There are increasing signs of some markets diverging from fundamentals. Some risk indicators are now at levels not seen since before the 2008 crisis." (Compiled by Reuters' IMF/G20 team)