WASHINGTON, Nov 1 (KUNA) -- President Barack Obama has outlined a cooperative framework for the G-20 summit in Seoul this month that aims to build on groundwork laid previously in order to reduce countries' external imbalances, facilitate exchange-rate adjustments and establish an assessment mechanism at the International Monetary Fund (IMF), a US official said on Monday.
During a White House briefing that previewed the G-20 agenda scheduled for Nov. 11 and 12 in South Korea, Lael Brainard, US undersecretary for international affairs at the Treasury Department, and other officials noted that the G-20 is now considered the premier forum for international economic cooperation, and includes the largest emerging and developed-country economies.
"The risk is increasingly clear that uncoordinated and unilateral actions could undermine the strong, sustained and balanced growth that we all need in the G-20," Brainard said.
US officials at the gathering will seek leaders' endorsement of the framework laid out by finance ministers on limiting excessive imbalances, Brainard said.
"At its core is a very important commitment that surplus countries no less than deficit countries will reduce external imbalances to sustainable levels," he said. "This is critical to ensure that as the US and other deficit countries seek a more balanced growth path, other countries use all the tools at their disposal to boost domestic demand so there are multiple engines of growth, greater export opportunities and stronger job growth." As the United States acts to address fiscal imbalances by repairing its balance sheets, boosting its national savings and investing in US competitiveness to achieve Obama's export goals, "other nations that have relied excessively on exports must act to boost their domestic demand, or we will all risk lower overall growth," Brainard said.
"Second, we are going to look for more progress on the part of key emerging market economies in moving to market-determined exchange rates based on economic fundamentals," he said. "When large economies with undervalued exchange rates act to keep their currencies from appreciating, it imposes an unfair burden of adjustment on other countries that are running more flexible exchange rate regimes." Solving this problem requires a cooperative approach, because emerging economies individually will be less likely to move unless they are assured that their neighbors will do the same, he added.
Third, the IMF must play a greater role in ensuring countries "meet these stated commitments," Brainard said.
"It is very much in America's interest to reform the IMF's governance, to make it more effective by making it more reflective of 21st century realities, with emerging market economies taking on more responsibility in line with their growing weight," he said.
In Seoul, the G-20 and the Financial Stability Board (FSB) will set out a road map to ensure that FSB and G-20 members provide the appropriate incentives and implement the requisite tools to ensure no financial institution is too big to fail, Brainard said.
"The G-20 as a whole will need to make progress on three fronts: ensuring the largest, most complex firms have enhanced capacity to absorb losses and are subject to enhanced supervision; implementing strong national resolution regimes that ensure taxpayers do not bear the burden; and building international cooperative frameworks to ensure that national resolution authorities work together to liquidate cross-border firms in an orderly manner, " he said.
Obama and the other G-20 leaders agreed during their meeting in Pittsburgh to phase out fossil-fuel subsidies, Brainard noted.
"This is part of our collective effort to encourage energy conservation, improve energy security, reduce budgetary burdens and, of course, start delivering on our commitments to reduce greenhouse-gas emissions," he said. (end) rm.bs KUNA 011955 Nov 10NNNN