* Global finance chiefs discuss rebalancing world economy
* European Central Bank says euro shouldn't bear burden
* World Bank wants more funds after crisis lending surge
* IMF to become "clearing house" for global economy
By Brian Love
ISTANBUL, Oct 5 (Reuters) - Plans to restructure the global economy faced a reality check on Monday when the head of the European Central Bank flatly rejected the idea that the euro should rise against the dollar to cut trade imbalances.
The need to reduce huge trade gaps between nations has been a major topic in talks between global finance chiefs on how to prevent another economic crisis. Many economists think the dollar may have to fall to help shrink the U.S. trade deficit.
But ECB President Jean-Claude Trichet stressed the euro should not have to bear part of that adjustment, underlining the difficulties that the world will face in achieving any rebalancing.
Asked in a Reuters television interview whether rebalancing implied a weaker dollar and therefore a stronger euro, Trichet replied:
"It does not at all, at all imply a change in the bilateral position of the dollar and the euro, not at all." [ID:nL5722734]
The euro has risen about 14 percent against the dollar since March and, at around $1.46, is not far from its record high of $1.6038, hit in July 2008.
Trichet and some other European officials, especially the French, have expressed concern that excessive strength of the euro could hurt the region's exports, even though the euro zone's trade surplus ballooned to 12.6 billion euros in July.
Currencies of emerging market nations should bear much of the brunt of any realignment, Trichet said.
"It is absolutely clear that a number of currencies have to progressively and orderly appreciate vis a vis both the dollar and the euro, but certainly not at all any change in the bilateral relationship," he said.
Trichet did not name the emerging market nations, but developed countries urged China once more at the weekend to let its yuan appreciate. China, which has a massive trade surplus, showed no sign of complying.
Asked about pressure from other countries for appreciation of the yuan, Yi Gang, a Chinese central bank vice governor, said China would continue its current policy, which focuses on keeping the currency stable against the dollar.
WORLD BANK
The challenges of reshaping the global economy were also illustrated in Istanbul when the World Bank, the world's main lender for development projects, appealed for more funding.
World Bank President Robert Zoellick has warned that the institution could face serious financing constraints by mid-2010 if demand for loans continues at its current pace.
The bank is proposing a capital increase of between $3 billion and $5 billion for the International Bank for Reconstruction and Development, its lending arm for emerging and credit-worthy middle-income nations.
But countries including the United States, France and Britain voiced reservations. U.S. Treasury Secretary Timothy Geithner said on Monday that any capital increase must be tied to reforms, such as increasing transparency and accountability, and ensuring lending programs were effective.
French Finance Minister Christine Lagarde said she did not even believe the bank needed fresh funds.
The World Bank "has substantial resources at its disposal to assist its members, resources that are far from being depleted", she said. [ID:nN05365896]
IMF
Officials also debated in Istanbul the future of the International Monetary Fund, which provided emergency funding and advice to countries during the economic crisis and could now have its role and financial size expanded dramatically.
Egyptian Finance Minister Youssef Boutros-Ghali, who chairs the IMF's steering committee, said the Fund was evolving into a "central clearing house" for money and information that would help ensure major economies coordinated policies.
The IMF's mandate should be adapted to "cover the full range of macroeconomic and financial sector policies that bear on global stability", Boutros-Ghali told Reuters. [ID:nN05348973]
But a group of prominent bankers, policymakers and economists said they feared the impetus for real change at the IMF would wane as pain from the economic crisis faded.
The so-called Group of 30 urged the creation of a new governing body, which it dubbed "the IMF Council", to oversee the global lender's executive board and provide "strategic direction".
The council would have a membership that gave more weight to emerging economies, such as China, India and Brazil, and less to the developed world. But the European Union has said it will become less generous in contributing resources to the IMF if its influence in the organisation is reduced sharply. (Editing by Andrew Torchia)