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Brazil economy - New Asian Currency.
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Showing posts with label
Brazil economy - New Asian Currency.
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Links ~ Latin America .. Politics and Economy December 2, 2011
Emerging Markets Seen as Part of Solution to Global Problems
*Lagarde wraps up visit to Latin America as Mexico takes over leadership of G-20*Praises Brazil as a leading actor on global economic stage*Says emerging markets can help in global solution to key problems
IMF Managing Director Christine Lagarde, wrapping up a visit to Latin America, said that the balance of economic power was shifting and that emerging economies were part of the solution to global problems.
Largarde, completing a trip to Latin America during which she met with leaders of Brazil, Mexico, and Peru, said that over the past decade, Brazil has had a remarkable trajectory, “combining economic stability, growth and significant progress in reducing poverty and inequality—even becoming an international benchmark in that area. In the process, the country has established itself as a leading actor on the global economic stage.”
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Lagarde, who earlier in the week was in Mexico ahead of it taking over the leadership of the Group of Twenty (G-20) industrial and emerging market countries, met on December 1 with Brazilian President Dilma Rousseff, and held productive meetings with Finance Minister Guido Mantega and Central Bank President Alexandre Tombini.
Shifting balance of power
“As the balance of economic power shifts, emerging economies are a key part of the solution to the global problems. Brazil consistently presents an important voice to the world on behalf of the interests of emerging and developing economies,” she said in a press release.
“This is a critical role. We welcome the Brazilian authorities’ willingness to consider contributing additional resources to the IMF. The country’s active involvement in governance reforms has been an instrumental force for positive change. This is a critical contribution to making the IMF more representative of the global reality, thus more legitimate and effective.”
Lagarde with Globonews network anchor William Waack during an interview in São Paulo, BrazilLess visible ~ During a television debate on the final day of her visit to Brazil, Lagarde said the IMF was working behind the scenes to help with the European crisis.
“I'm very happy if the IMF is in the middle of it, but in an effective way, not necessarily a visible way,” Lagarde said in the recording of a Globo News TV news program in São Paulo.
Lagarde urged euro zone countries to find a collective, comprehensive solution to the crisis or risk enduring a lost decade.
Not immune ~ Lagarde praised the management of the Brazilian economy.
“The marked resilience of the Brazilian economy is the product of a strong track record of competent macroeconomic management based on the three pillars of fiscal responsibility, inflation targeting and flexible exchange rate. In the last few years, Brazil has also benefited from a solid and well-capitalized banking sector, which has so far softened the impact of one important channel of contagion from the global financial crisis,” she said.
“But that is not to say Brazil is immune to the crisis. In our highly interconnected world, nobody is. For Brazil, the challenge is now is to find the right balance between supporting growth and at the same time guiding inflation to converge to the central bank’s target. And do all that while at the same time protecting—and even expanding—its social spending and improving infrastructure.”
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Related Articles ~ Links ~ Brazil's Economy and Currency February 19 2011
Brazil calls for currency system overhaul
The G20 group of big economies must tackle the causes of global economic imbalances instead of getting bogged down in debating how to measure the problem, said Guido Mantega, Brazil’s finance minister.
In an interview on the eve of the G20 finance ministers’ meeting in Paris, he blamed excessive liquidity in developed economies – including the US and Europe – for soaring commodity prices and destabilising capital flows into emerging economies.
He called for a fundamental reform of the international currency system, to expand the use of special drawing rights from the International Monetary Fund as an additional reserve currency, and inclusion of both China’s renminbi and Brazil’s real in the SDR basket, alongside the US dollar, the euro, the yen and the British pound.
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Warning again of a “currency war” destabilising the world economy, he said a “new monetary system” must be based on a basket of currencies “that will better express the reality of the world economy today”. The IMF, he added, should transform itself into a “global issuing bank” to underpin the expanded use of SDRs.
“What we really have to do is tackle the causes of the imbalances that we face today, imbalances in capital flows, and imbalances of currencies, which affect our trade imbalances,” he said.
“It is not so easy to advance towards reform of the international monetary system that has existed for more than 50 years, but at one moment we will have to start. This system is not working any more.
“Of course this will take a while. But we cannot blame the inefficiency of the system without moving towards a solution.”
He said Brazil had seen an appreciation of its currency, the real, of some 50 per cent between 2006 and 2010. Capital inflows had increased by 50 per cent in 2010 compared with 2009.
“It is very difficult to manage,” he said. “One of the reasons is the monetary issuing policies of the US and the UK too, and other European countries. The other reason is that our situation is more solid than in other emerging countries.”
He defended Brazil’s introduction of capital controls to slow down the inflow, and rejected suggestions from other G20 countries that such controls should be subject to strict new rules.
“We have to make it clear that we limit capital flows because we have no other alternative. We would prefer to have capital freedom and a freely floating exchange rate system. We are only using these limits because others are using their exchange rates as a weapon for trade.”
Mr Mantega, who first warned of a global “currency war” last year, also spoke out strongly against any moves to regulate commodity markets in order to curb the rise in prices for foodstuffs, oil and minerals.
He said there were “multiple causes” for the price rises, including excessive liquidity from developed countries, increasing demand from emerging countries, and climate change that had caused drought in Russia and other parts of Europe. Another cause was the subsidy policy of the European Union.
“To interfere in this market with some form of price control will end up having the opposite effect to what is intended: to inhibit the supply side,” he said.
“We need a continued effort to stimulate the supply side.”
But he did back a French proposal for a more transparent commodity market. linkRelated Article ~ Links ~ Brazil's Economy and Currency
IMF Managing Director Christine Lagarde, wrapping up a visit to Latin America, said that the balance of economic power was shifting and that emerging economies were part of the solution to global problems.
