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WASHINGTON (Reuters) - The following are comments on Saturday from finance officials in Washington for the semiannual meetings of the International Monetary Fund and World Bank, and a meeting of Group of 20 leaders.
"We are meeting at a time when there are some signs, albeit tentative, of stabilizing global economic activity. Although financial market conditions have improved, their impact on the real economy has been muted so far. Global growth remains weak and the global economy continues to face several risks. Moreover, some new concerns have also arisen. As such, the global economy continues to pose huge challenges for policymakers, particularly in advanced economies."
"'Adjustment fatigue' could lead to a resurgence of the crisis and one must add that this would have an impact on Switzerland. In such an uncertain environment, the minimum exchange rate policy of the central bank remains indispensable."
"The Swiss franc is still very high."
GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE ON DEBT REDUCTION:
"Fiscal and financial sector adjustments remain crucial to regain lost credibility and strengthen confidence. International cooperation remains crucial. At the current juncture, it is in particular the responsibility of the advanced economies, including Japan and the U.S., to follow through with ambitious fiscal consolidation over the medium-term to reduce public debt ratios which in several cases have reached unsustainable levels."
"It will be also important to ensure that Fund advice as well as its financial and technical support is tailored to (Middle East-North Africa) countries' exceptional circumstances and needs and that macroeconomic and structural policy implementation remains consistent with the objective of achieving successful transition."
"The commitment from G20 countries to avoid targeting exchange rates for competitive purposes, and to resist all forms of protectionism and keep markets open is a fundamental principle of economic policy management that should be respected by all IMF member countries."
"If such monetary easing succeeds in avoiding financial crises and placing advanced economies on the path of recovery, it will produce positive effects for the entire global economy."
"Although unconventional monetary policies in major advanced economies have helped stabilize financial markets and foster economic recovery, it is necessary to reevaluate the marginal benefits and costs of such policies after multiple rounds of monetary easing.
"Unconventional monetary policies alone cannot solve the structural problems faced by advanced economies, and should not become a substitute for structural policies.
"Prolonged easing could exacerbate the financial vulnerabilities and affect the stability of the international monetary system."
EUROPEAN CENTRAL BANK'S EWALD NOWOTNY ON EFFECT OF JAPAN'S MONETARY
"As far as the exchange rate goes (against the yen), we are at the same level we were two years ago. That means I don't see any massive threat to Europe."
"However, you have to monitor this development very closely. If this dynamic were to continue, those would be moves of a relevant magnitude."
AND MINISTER FOR FINANCE AND IMFC CHAIRMAN ON STRUCTURAL REFORMS:
"There was a very strong view that we had to place greater emphasis on structural reforms, structural reforms to create jobs as well as to boost productivity."
"There also had to be stronger emphasis on credibility of medium-term fiscal consolidation."
"There still needed to be accommodative monetary policy in advanced economies, but an over-reliance on accommodative monetary policy without addressing the need for credibility in medium-term fiscal consolidation and without stepping up the pace of structural reforms was unlikely to lead us back to normal growth."
"You can't rely entirely on defensive measures to keep your exchange rate unchanged because if you do that then there's an implication for the domestic money supply and liquidity. ... Neither do we take the view that short-term capital flows ... should be accommodated fully by exchange rates."
IMF MANAGING DIRECTOR CHRISTINE LAGARDE ON MONETARY, FISCAL POLICIES:
"In its advice and analysis, the Fund will seek the right balance between supporting growth (including through monetary easing) and removing the millstone of high private and public debt ... "
"Worries over currency valuations and competitive depreciation are on the rise."
"IMF will be doing some additional work on consequences of unconventional monetary policy - and what will be the consequences of the variety of exit and what will be the good exits as opposed to the more unpleasant exits for all members."
"... We certainly heard from entire membership that it is unconventional that central bankers ... jumped into an unknown landscape, uncharted territories as they have said and there is clearly a common view that we should do further work and investigation and academic research to make sure we identify the risks and benefits of any exit."
"The more a central-bank gets involved in fiscal-policy, the more its independence is in danger ... "
"It is clear, that the longer an ultra-expansionary monetary policy is pursued, the more the risks increase."
GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE CENTRAL BANK POLICIES:
"Every independent institution has to have a limited mandate."
"Japan must be very careful ... Japan had to face critical questions."
"Credible medium-term fiscal consolidation plans remain crucial, in particular for the United States and Japan. Accommodative monetary policy is still needed to help bolster growth but needs to be accompanied by credible medium-term fiscal consolidation plans and stronger progress on financial sector and structural reforms. This will also help contain any potential impacts of monetary easing on capital flows and exchange rates. Eventual exit from monetary expansion will need to be carefully managed and clearly communicated."
"In the euro area, further progress in repairing bank balance sheets and reducing financial fragmentation is crucial. Structural reforms to boost productivity and employment need to continue. Further tangible progress is needed on core elements of an effective banking union and a stronger fiscal union, to strengthen the resilience of the monetary union."
"With activity picking up, policies should be recalibrated to rebuild buffers and guard against financial vulnerabilities."
"When dealing with macroeconomic or financial stability risks arising from large and volatile capital flows, macroeconomic policy adjustment could be supported by prudential measures and, as appropriate, capital flow management measures. Such measures should not, however, substitute for warranted macroeconomic adjustment."
MEXICAN FINANCE MINISTER LUIS VIDEGARAY ON NEGATIVE SPILLOVERS FROM MONETARY
"It's clear that advanced economies are not ready yet to abandon this state of monetary easing and it is in the best interest of developing countries for advanced economies to continue to support these policies in terms of growth."
"It's not only about restricting advanced economies in their monetary policy but it's also about how developing countries react in terms of their own regulation. It's a challenge and it's going to continue to be a challenge."
VIDEGARAY ON EFFORTS WITHIN THE G20 TO COMBAT TAX AVOIDANCE:
"We were hoping for more specific language. We were hoping for a commitment to adopt this mechanism, or at least express an interest, by our next meeting in St. Petersburg. That unfortunately was not part of the communique."
"We need to have multilateral levels for information exchange."
"This would be extremely useful for a small, open economy like Mexico."
ANGEL GURRIA, SECRETARY-GENERAL OF THE ORGANISATION FOR ECONOMIC COOPERATION
"There is also a risk that global imbalances and financial stability issues have not been addressed adequately and problems will emerge again as the economy picks up."
"Global financial markets show signs of renewed exuberance that is increasingly out of line with fundamentals. This gaping disconnect between the financial sector and the real economy should be a source of concern."
"Given limited fiscal space in most OECD countries, monetary policy remains a key instrument for supporting demand, even though monetary stimulus may not always be sufficient to close output gaps quickly and carries its own risks."
"The boldness of (Japan's) moves have boosted confidence and improved the chances of escaping from deflation and achieving more satisfactory output growth."
UNITED ARAB EMIRATES CENTRAL BANK GOVERNOR SULTAN N. AL-SUWAIDI ON GLOBAL
"Global prospects are still hampered by the lack of clarity in advanced economies' policies where reliance has been primarily on short-term measures that do little to strengthen confidence in a durable way."
"A key concern in Europe is adjustment fatigue as the crisis extends in duration and scope with slow progress in moving toward economic and banking union, and more efforts are needed to address weak balance sheets and the weak monetary transmission and credit intermediation."
"Most emerging market economies continue to be a source of stability and growth with little signs of overheating and are expected to return to pre-crisis growth levels with a receding risk of a hard landing. Some Low-Income Countries (LICs) are also undergoing sustained strong growth, reaping the gains from prudent macroeconomic policies and structural reforms. However, a large number of developing countries and LICs are adversely impacted by the double-dip recession in Europe and sluggish growth in the U.S. and Japan. Commodity exporters are at risk given the expected decline in most commodity prices in 2013."
AUSTRIAN FINANCE-MINISTER MARIA FEKTER ON U.S., JAPAN POLICIES:
"In the United States ... policymakers need to address persisting fiscal policy uncertainty and install a credible medium-term fiscal consolidation framework."
"The prolonged monetary easing in the U.S. could create economic and financial distortions, understate the importance of fiscal consolidation, and spur destabilizing capital flows to other regions."
"We welcome the recent bold policy steps taken by the Japanese authorities."
"Nevertheless easy monetary policy cannot be a substitute for the much needed medium-term fiscal consolidation."
"The global economy remains confronted with significant legacies from the build-up of imbalances prior to the crisis. So far, these have not been fully addressed. Public debt levels remain very elevated in many advanced economies. The (IMF) Fund rightly recommends ... comprehensive medium-term deficit reduction plans that would achieve gradual but persistent consolidation."
"The accommodative monetary policies of the major central banks have reduced risk aversion and supported balance sheet corrections and growth. However, such policies do not provide a lasting solution to the structural problems that governments and prudential supervisors should help address. Without structural adjustments, monetary policy may become overburdened."
"The unsustainable fiscal situation in the U.S. and Japan is a source of concern and uncertainty. Credible medium-term fiscal plans should be promptly developed."
Reporting by Reuters' IMF and World Bank reporting team