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UPDATE 2-INTERVIEW-China, US key to global imbalances-Meirelles

Published 09/18/2009, 03:43 PM
Updated 09/18/2009, 03:51 PM

* Global imbalances mostly between U.S., China

* 7 pct increased stake for emerging markets is minimum

* G20 won't disappear after crisis, no turning back to G7 (Recasts, adds detail, quotes, background)

By Raymond Colitt and Ana Nicolaci da Costa

BRASILIA, Sept 18 (Reuters) - China and the United States hold the keys to fixing global economic imbalances and the G20 group of key economies would outlast the worldwide crisis, Brazil's central bank chief Henrique Meirelles said on Friday.

"There is certainly concern about global imbalances," Meirelles told Reuters in an interview, adding that the United States and China were the main cause.

"Certainly only moves by the two sides can achieve rebalancing, that is by increasing U.S. savings and increasing Chinese consumption," Meirelles said.

Meirelles also said that demands by emerging economies for a bigger voting right in the International Monetary Fund were a necessary minimum. Brazil, Russia, India and China have proposed emerging markets be given an additional 7 percent stake in IMF decision-making.

But the United States is only willing to increase that stake by 5 percent, sources close to the discussion have said.

"That (7 percent) is exactly the level we consider a necessary minimum," Meirelles said.

"The efficiency of the Fund depends on its legitimacy ... that's why it's important that its decision-making process reflects the composition of the world economy."

The IMF, national governments and the Financial Stability Board were becoming the main "implementers" of decisions taken by the G20, Meirelles said.

G20 leaders meet in Pittsburgh on Sept. 24-25.

Despite concern by some that the G20 may be inefficient in its proceedings, the group was still the best option to replace the smaller G7 group of industrialized nations, Meirelles said.

"The most practical and efficient movement is toward the G20 and not the definition of a new group," Meirelles said at the central bank in Brazil's capital.

"It's clear for everybody involved that you can't discuss the world economy efficiently and take efficient measures only within the G7," Meirelles said when asked if he thought the G20 would lose influence once the global crisis was overcome.

"I don't think there will be a step back."

Meirelles also said that Brazil would not make any sudden or drastic changes to the make-up of its monetary reserves.

"There will not be dramatic or radical changes, not in the short run," Meirelles said.

Brazil and other emerging economies have been seeking ways to reduce dependence on the U.S. dollar as a reserve currency and have discussed moving towards a basket of currencies.

Neither convertible currencies from small economies nor inconvertible currencies from large economies were likely candidates for reserve currencies, he said. (Editing by Stuart Grudgings and Editing by James Dalgleish)

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