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France outlines G20 hopes, wants currency discussion

Published 08/26/2009, 12:22 PM
Updated 08/26/2009, 12:27 PM

By Anna Willard

PARIS, Aug 26 (Reuters) - France wants a G20 debate about how to rebalance the world economy and how to avoid excessive moves between leading currencies during the transition, President Nicolas Sarkozy said on Wednesday.

In a post-holiday speech on foreign policy, Sarkozy outlined his agenda for the Sept 24-25 meeting in Pittsburgh and said it was important not to lose the will for reforms that was built up during the financial crisis.

"We must not lose the momentum we had and we must not wait for tomorrow, we need to act now," he said.

He said the crisis had signalled the end of an era unsustainable imbalances of the United States and China.

The U.S. savings rate was likely to increase but China would continue to rely on exports as a key motor for economic growth for some time.

"The question, how to manage the inevitable tensions of this period of transition?...How to avoid the developments in the levels of key exchange rates which could lead to very serious tensions?" Sarkozy said.

He said it was clear that the world could not longer depend on a single currency for financial stability but that "excessive and deeply destabilising moves" should be avoided.

"But France will not accept, I say it clearly, that the euro bears on its own the weight of adjustments, as it has done in the past," he said.

"It's too serious for jobs in France."

Sarkozy also hopes for a discussion of oil prices in Pittsburgh.

"The question of energy prices, and notably of oil, which is nothing less than the other time bomb which weighs on tomorrow's growth," he said.

"It should not be a taboo subject."

He would also press his G20 counterparts to follow France's lead with tough new rules to limit bankers' bonuses.

Changes to accounting rules so that they no longer focus on the short term valuations, and supervision of speculative funds, would also need to be discussed, he said. (Editing by Andy Bruce)

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