WASHINGTON, April 18 (Reuters) - The following are highlights of the International Monetary Fund and World Bank meetings on Saturday in Washington, where finance ministers, central bankers and other top officials are gathering.
ON HOW EUROPE IS PROTECTED FROM GREECE‘S PROBLEMS
“We have learned to build walls to protect ourselves, to protect the banking system, to protect other countries which could become fragile, if something happens in Greece. So Europe is much stronger. Europe has sheltered itself from turbulence. The danger is for Greece.”
“The fall in the value of the euro is very good news for all of Europe and in particular for France. It’s very good news.”
“So I think what would be good for the European economy is a vision of stability. It doesn’t mean things won’t move. Markets can move...but the perspective that seems good is one of stability.”
“The perception of Brazil is changing - it is more positive.”
“I am more confident about the situation now than when I arrived (at the IMF meeting this week).”
ON JOINING ASIAN INFRASTRUCTURE INVESTMENT BANK AND LAUNCHING BRICS DEVELOPMENT BANK
“Well, for AIIB, the same reasons as the other 56 countries joining. We also discussed during this weekend the so-called new development bank, the BRICS bank. And I think we made progress.”
“We are likely to nominate the management ... we hope to have them by April 30, in two weeks or 10 days, and then have them meeting in Shanghai in mid-May. I think the first step of having this bank as a reality, we’re going to see that by mid-May and I think that is very important. ... There is tremendous demand for how you finance infrastructure.”
“We are ready to welcome new additions to the international development architecture, including the Asian Infrastructure Investment Bank, provided that these institutions complement existing international financial institutions, including by adopting their high quality standards. Having the AIIB co-finance projects with existing institutions will help demonstrate a commitment to these high standards.”
RUSSIAN FINANCE MINISTER ANTON SILUANOV IN STATEMENT TO IMF STEERING COMMITTEE
“One of the principal sources of uncertainty in the world economy may well be doubts about the success of unconventional monetary policies in Japan and the euro area. ... The Japanese experiment shows the limitations of accommodative monetary policy in the presence of deeply entrenched structural problems.”
“We believe that the creation of new international development banks, such as the BRICS New Development Bank and the Asian Infrastructure Investment Bank, will help boost growth in the world economy over the medium term.”
”The two interim options that have been proposed - the delinking and ad hoc solutions - make sense only if they do not inhibit the rapid completion of the 2010 reforms. ...
“If it is not possible, we need to choose the path of delinking. The ad hoc option is not workable and would only exacerbate the situation.”
BRAZILIAN FINANCE MINISTER JOAQUIM LEVY IN STATEMENT TO IMF STEERING COMMITTEE
“With regard to Greece, we hope that a debt agreement be reached soon, as we believe it is the best solution to Europe.”
”The normalization of monetary policy in the U.S. will possibly lead to an increase in speculative short-term capital movements with potential adverse effects on financially open emerging market and developing countries.
“However, the dollar appreciation may lead to a rebalancing of U.S. growth towards higher consumption with lower inflationary pressures. This means that the interest rate path may follow a more moderate increase than it would be observed in the absence of exchange rate movements.”
CHINA CENTRAL BANK GOVERNOR ZHOU XIAOCHUAN IN STATEMENT TO IMF STEERING COMMITTEE
“Asynchronous monetary policy in major advanced economies, abrupt changes in oil prices, and renewed geopolitical tensions may trigger another round of turbulence in the global financial market.”
“In the U.S., the monetary policy stance should always be effectively communicated - taking into account the side effects from a prolonged accommodation.”
JAPANESE FINANCE MINISTER TARO ASO IN STATEMENT TO IMF STEERING COMMITTEE
“The Bank of Japan views that, as the effects of the decline in oil prices dissipate, the inflation rate rises again and is likely to reach around 2 percent in or around fiscal 2015.”
“Given the delay in the 2010 (IMF quota) reforms, we need to advance discussions on an ‘interim step’ toward the 2010 reforms. In this regard, Japan believes it necessary to ensure that any option, taken as an interim step, will facilitate the early ratification of the 2010 reforms and will not go beyond nor substitute the outcome of the 2010 reforms.”
INDIA FINANCE MINISTER ARUN JAITLEY TO IMF STEERING COMMITTEE
ON EVENTUAL EXIT FROM UNCONVENTIONAL MONETARY POLICIES (UMP) IN DEVELOPED COUNTRIES:
“The exit, when it commences, could create turbulence in global financial markets. Central banks in the major advanced economies, therefore, need to take into account the impact their policies may have on other emerging and developing economies. The IMF, which has been supporting such policies, also needs to reconsider whether UMPs militate against the core mandate of the Fund to maintain exchange rate stability... It is imperative that interest rate normalization by central banks in the major advanced economies is predictable and well communicated.”
ON INTERIM SOLUTION OPTIONS FOR IMF QUOTA REFORM: “Among the options being considered, we believe that the delinking option remains the most desirable option since it is the nearest in form and substance to the 2010 reform package. The ad hoc option would reduce the incentive to implement the 2010 reforms in full.”
CANADIAN FINANCE MINISTER JOE OLIVER IN STATEMENT TO IMF STEERING COMMITTEE
“Among the most significant downside risks are the potential for financial instability associated with asynchronous monetary policy in systemic economies and rapid movements in foreign exchange markets; market volatility stemming from slowing rates of growth in China and other large emerging markets; as well as geopolitical tensions, notably in Ukraine and the Middle East.”
“To be sure, it is essential that measures take place within a framework of balanced budgets and sustainable debt to ensure that confidence is maintained.”
“The IMF also now recognizes that monetary policy has arrived at the limits of what it can achieve.”
“There was also a discussion of the danger of over-burdening monetary policy ... the tendency to see monetary policy as the only workable instrument leads to discussions about the independence of central banks.”
“I certainly did not hear anyone saying that anything we (in Europe) are doing would be (currency) manipulation.”
On an increase in Treasury bills on the balance sheet of Greek banks: “That’s something that really cannot be allowed.”
ITALIAN FINANCE MINISTER PIER CARLO PADOAN, ON BEHALF OF ALBANIA, GREECE, ITALY, MALTA, PORTUGAL, SAN MARINO, IN STATEMENT TO IMF STEERING COMMITTEE
“A speedy agreement between Greece’s international creditors and the Greek government regarding the extension of the program is a necessary condition for a stable recovery of growth.”
“The government is currently in intensive negotiations with the European Institutions and the IMF aiming at completing a program review pending from last year, before discussing a new agreement for the remainder of 2015 and beyond. The risks and challenges imposed by liquidity constraints, deflation, brain drain and debt sustainability remain, but the medium-term growth outlook of the economy is positive.”
IMFC CHAIRMAN AND MEXICAN FINANCE MINISTER AGUSTIN CARSTENS
“I came out of this meeting with a sense of optimism. I think the fact that a lot of the discussion basically rotated around how to increase growth, how to increase growth with financial stability and not only discussing (the) risks. I think that was a very good sign.”
“Today’s discussion focused mostly on how to enhance growth, and at the same time achieve financial stability.”
“The first best is to have an early ratification of those reforms, and therefore we urge the U.S. to get this ratification as soon as possible. ... We called on (the) IMF Executive Board to pursue an interim solution, and basically all options are on the table.”
(China has) clearly indicated strong confidence on growth continuing in China, certainly not on the level that China has had in the last decade, but growth of a different nature, which is more quality growth and confidence that that level of growth, which is around 7 percent, possibly a little bit below, is satisfactory given the level of development that China has now reached.
“What we very much hope is not only speeding, but deepening of the work. It’s not a question of racing to the end, but doing all the work that must be done.”
”As far as the emerging markets economies are concerned, for instance, there are clearly different tools that can be used by the monetary authorities, by the fiscal authorities, in order to respond to potential volatility as the result of this gradual tightening of monetary policy by the Fed.
I think what we learned from the tapering tantrum that we saw in May and June 2013 is that countries have to have the macroeconomic fundamentals as solidly determined and anchored as possible, and that they can use monetary policy in a subtle way, depending on under what pressure they are, whether it’s domestic pressure, whether it’s external pressure. And if everything has been tried, certainly the recourse to some degree of capital control has been discussed in the past by the IMF, and (a) policy decision has been agreed in that respect as a last-resort tool.”
“We all want Greece to succeed. The answer is in the hands of the Greek government. Much more work is needed now and it is urgent. We want to reach a comprehensive policy package within which the policy priorities of the Greek government can be carefully assessed, a debt sustainability analysis can be made and a figure for the budget surplus can be determined.”
“ELA will continue to be given to the banks if they are judged to be solvent and if they have adequate collateral, which is the case now.”
“Now we are better equipped than we were in 2012, 2011, 2010. Having said that, we would certainly enter into uncharted waters if the crisis were to precipitate.”
“The exchange rate is not a policy target, it is the outcome of different business cycles in different jurisdictions and different monetary policies or monetary policy cycles. So I cannot express any hope about it.”
“I don’t even want to contemplate such an event for the reason that the Greek leaders have repeatedly stated that they want to honor their obligations”.
“It is pointless to go short on the euro.”
”The perspective of rate hikes has to be assessed by competent monetary policy authorities. If it is well done, it is important because all our monetary policies, but especially those that started first, have been in the unconventional regime for a long time - the next rate hike in the U.S. will be the first in 8 years - so it is an experience that should be prepared and I know it is being prepared very, very carefully.
“So if this is, as it is being prepared and communicated and is being pre-announced to markets very carefully for a long time, the consequences should be manageable.”
NIGERIAN FINANCE MINISTER NGOZI OKONJO-IWEALA TO IMF STEERING COMMITTEE
”While the low oil prices could boost growth, especially in advanced economies, the uncertainties surrounding the future oil price path remains a major concern, particularly for the emerging market economies and oil exporters.
“On the downside, risks related to shifts in sentiments in global financial markets and bouts of volatility associated largely with anticipated U.S. normalization of monetary policy and surprises of activities in major economies are still elevated.”
TURKISH DEPUTY PRIME MINISTER ALI BABACAN TO IMF STEERING COMMITTEE
”The high uncertainty surrounding the resumption of the Greek program and developments in Ukraine pose additional risks to Europe’s outlook. Growth in most emerging markets has been slowing though growth rates still remain at rather enviable levels ...
“We believe that any fiscal stimulus from public investment in the euro area needs to be coordinated (and funded) on euro area level, and it should be carefully structured in order not to crowd out private sector investments.”
BELGIAN FINANCE MINISTER JOHAN VAN OVERTVELDT TO IMF STEERING COMMITTEE
“We stress that non-conventional monetary policy accommodation alone cannot bring a lasting solution or achieve our objectives for growth and employment creation. There is no substitute for ... structural reform policies.”
FRENCH FINANCE MINISTER MICHEL SAPIN TO IMF STEERING COMMITTEE
“There is a crucial need to keep supporting the recovery by stimulating and rebalancing global demand. If we want our collective commitment to strong, sustainable and balanced global growth to be more than just rhetoric, we have to leverage all the means available to us. And we must do so now.”
“What is important is that Greece solve its economic problems, that it stabilizes its country and restores meaningful growth.”
”We understand very well that this is a newly-elected government that wants to take different approaches to solving Greece’s problems than the government it replaced ... But the litmus test is whether this government can, and will, choose to put together a package of policies to solve Greece’s problems, to stabilize and restore growth.
“We have had some discussions with them, but we need far more discussions, and more concrete discussions, in order to get to the nub of the subject.”
GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE ON REPORT OF GREEK-RUSSIAN GAS PIPELINE DEAL
“I am happy about that for Greece ... everything that helps Greece is good.”
“But I do not think that this would solve the problems Greece has in fulfilling the commitments of the memorandum of understanding (with its European partners) ... I could not imagine that whatever was agreed with Russia has a dimension that would solve the existing problems.”
Compiled by Reuters' IMF/G20 team