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Sinha urges central banks of G-20 to focus on exchange rate management

Union Finance Minister Yashwant Sinha has called upon the G-20 countries to build a niche for its role in the emerging new international financial architecture without diluting the roles of the Bretton Woods institutions.

Addressing the meeting of the finance ministers and central bank governors of the member-countries of G-20 in Berlin, Germany, on Thursday, Sinha said the group, being an informal one, should not take decisions but attempt at building consensus on issues of importance.

Sinha said, ''The recent currency crises showed that fixed exchange rates often come in the way of resolution of the problem. This does not mean that countries do not have a number of considerations in choosing an exchange rate system. What is important is that countries' exchange rate polices should be accepted as credible by market participants.

"Besides, these policies should not affect the economic prospects of other countries. International cooperation among central banks is vital to ensure that exchange rate policies pursued by G-20 countries are beneficial not only for their economies but also for the rest of the international monetary system.''

The issue of an optimal exchange rate regime is not fully settled and discussion may be required for taking a clear view on the issue of exchange rate management, he said.

Sinha also called on Germany's minister for economics and technology, Werner Mueller.

UNI

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