Countries around the world need to work more closely together on foreign exchange policies and financial supervision, said Lael Brainard, the U.S. Treasury’s undersecretary for international affairs, speaking in Washington today.
“When some countries engage in policies of competitive non-appreciation that impede global adjustment, it exacerbates adjustment challenges for other countries -- whether through intensified capital inflows or diminished trade opportunities -- and lowers growth overall,” Brainard said in prepared remarks for a speech to the Institute of International Bankers.
Brainard also reiterated the U.S. view that promoting global growth should be the overarching goal for international leaders, and she called for tougher and more coordinated oversight of hedge funds and derivatives.
Her remarks come after a weekend of talks in Washington that failed to resolve currency tensions. At meetings of the Group of Seven nations and the International Monetary Fund, the U.S. continued to press for China to let its currency rise, while economic leaders agreed on little other than the need for further IMF studies.
Brainard said officials at the meetings “emphasized the critical responsibility of each major economy to support the global adjustment process.” She also said the world needs to come together to force banks to hold more capital, and she said the U.S. is committed to implementing new rules from the Basel Committee on Bank Supervision, also known as Basel III.
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