Transcript of remarks as prepared for delivery by U.S. Treasury Secretary Timothy Geithner made at the G20 conference in Nanjing earlier today, via WSJ / China Real Time:
I welcome this seminar on reform of the international monetary system. This is a good time to assess the strengths and limitations of the current system, because the world economy is going through very substantial changes.
Among the major forces shaping the global economy are the enormous opportunities created by the rise of China, India, Brazil and other dynamic emerging economies; slower growth in the advanced economies; a shift in the balance of global economic power and dynamism from the G-7 to the G-20; rising capital mobility across borders, combined with rapid financial modernization and deepening in emerging economies; and rising demand for energy and food, currently coupled with supply disruptions.
These historic changes create the potential for large swings in capital flows, large moves in exchange rates, and more volatile economic growth.
At the national level, the imperative is to build a resilient institutional framework more capable of absorbing future economic and financial shocks:
- Stronger institutions for economic policy management: independent central banks; fiscal policy rules that help deliver sustainability; strong, independent oversight of financial institutions and markets.
- Flexible exchange rate policies that can help countries better absorb shocks and enable monetary policy to be tailored to national circumstances.
- Financial rules that limit leverage, funding risk, and currency mismatches in banks.
- Economic reforms that foster greater balance in the composition of growth within and among the major economies to avoid the buildup of large external imbalances.
- Stronger investments in improving agricultural productivity, and incentives to improve efficiency in the use of energy and other supply-constrained commodities.
At the international level, we have made a lot of progress in building a more powerful and more agile framework of institutions and financial instruments to deal with this changing global economy.
Read full transcript here.