OTTAWA The Group of Seven leading industrialized nations must go into this weekend's G20 meetings forcefully pressing major emerging economies to adopt flexible foreign exchange rates, Bank of Canada Governor Mark Carney said on Tuesday.
Carney, who is the incoming Bank of England governor, also said it was critical that no G7 members use monetary policy to target exchange rates. His comments come after Japan's new government pressed for an aggressive expansion of monetary policy, which has caused the yen to weaken sharply.
Carney was testifying to a Canadian House of Commons committee about Canada's monetary policy, hours after the G7 issued a statement on flexible forex regimes.
"We signed a statement ... which reaffirmed the commitment of the G7 to ensure that monetary policy is focused on domestic objectives, not on targeting exchange rates. And we hold the members of the G7 to that long-standing position," he said.
"It is extremely important, it's important that we as a G7 go in united and forcefully to the G20 to enlarge that commitment as quickly as possible amongst the major emerging economies in the G20, some of whom entirely ascribe to flexible exchange rates and are supportive, others who have a lot of work to do in this regard."
The Group of 20 leading nations groups the industrialized G7 and other major economies including China and South Korea. G20 finance ministers and central bankers will meet on Friday and Saturday in Moscow.