October 15, 2011 / 2:45 PM / 8 years ago

Paris G20 finance chiefs closing remarks

PARIS (Reuters) - G20 finance ministers and central bank governors put strong pressure on euro zone leaders at a two-day meeting in Paris to come up with a convincing solution to the bloc’s debt crisis and avert the risk of a fresh global recession.

Following are key quotes from closing news conferences on Saturday by G20 chair France and other delegations:


“The risk of recession would be increased dramatically were the Europeans to fail to accomplish the goals they have set for themselves on October 23, followed by Cannes (in) November.”


On how the euro zone plan is progressing:

“Based on my extensive discussion with them over the last six weeks or so and looking at what they’re saying in public too, I am encouraged by the direction and by the speed at which they’re moving now and by the shape of the strategy. But as you know, it’s all in the detail and it’s very hard to judge what in fact will happen until you see its basic shape.”

“The leaders of Germany and France have committed publicly to put this framework in place over the next two weeks, before G20 leaders convene in Cannes. They clearly have more work to do on strategy and details, but when France and Germany agree on a plan together and decide to act, big things are possible.”

On the IMF:

“The IMF has a substantial arsenal of financial resources, and we would support further use of those existing resources to supplement a comprehensive, well-designed European strategy alongside a more substantial commitment of European resources.

On imbalances:

“A successful global response would be strengthened by more progress towards domestic demand led growth in the major emerging market economies and a more rapid pace of exchange rate appreciation by China.”


“Currently, the global economy has entered a difficult period. Various countries should continue to pull together in times of trouble. They should further coordinate macroeconomic policies to maintain economic growth and promote financial stability, oppose various forms of protectionism in trade and investment. Major economies should ensure economic recovery and financial stability in the short term, strengthen financial consolidation and structural reforms in the medium term and reduce the negative spillover effect from their macroeconomic policies. Emerging market economies should take flexible, effective macro measures to prevent economic slowdown while curbing inflation and dealing with the impact of capital flows. They should also speed up economic restructuring and promote stable, relatively fast economic growth.”


On the euro zone’s debt crisis:

“That took up a little part of our dinner last night. We presented ... elements of the global and lasting package which heads of state will present at the Oct 23 summit. It responds to the Greek issue, the maximisation of the EFSF, on the level of core tier 1 with a calendar which will be coordinated by the heads of government for the recapitalisation of the banks. It responds, naturally, on the governance of the euro zone... We still have a week to finalise it.”

“I have to tell you in truth that the results of the European Council on October 23 will be decisive.”

On discussions with Berlin on Greek debt:

“We’ve made good progress with the German finance minister. There are points of agreement which are emerging rather clearly and we will have an agreement on this point, but it would be premature to say what accord will emerge on Oct 23.”

On IIF opposition to more losses for Greek creditor banks:

“We will find an answer. You know the French position which is quite clear: we will refuse any solution that leads to a credit event.”

On banks and liquidity:

“Central banks will continue to supply banks with necessary liquidity, we will ensure banks have the necessary capital. This is a very important message central banks are sending.”


“Not only Saudi Arabia but members of the G20 are convinced that the challenge facing the global economy is the European challenge in the short term.”

“However, we felt from the interventions of our European colleagues that they appreciate the gravity of the situation and they are determined to do what it takes to safeguard the European economy and financial markets.”

“They told us decisions will be taken at the October 23 summit that will reassure Europeans first and the rest of the world second that Europe is not only able but also willing to do what it takes to safeguard European markets. I take what they told us at face value and I have no reason doubt the determination.”


“Our G20 partners welcomed that the representative of the euro zone have kept their word: the decisions on strengthening the EFSF have passed through parliaments in all member states.”

“We will solve the problems in the euro zone in the same way. We are determined to present further decisions in Cannes.”

“We will make sure that European banks have a sufficient amount of capital. We will find solutions for Greece. We will start initiatives to improve governance in the euro zone and this will contain changes in EU treaties.”

“We have agreed to use the EFSF in an effective way so as to reduce the risk of contagion.”

On leveraging the EFSF via the ECB:

“There is no discussion on this proposal. There are other ways.”

On additional IMF capital:

“Our position is that we do not see any need for additional capital for the IMF at the moment.”

On financial transaction tax:

“It was again made clear that we have to implement the financial transaction tax in Europe because there is no support to do that on a global basis.”


On EFSF leveraging via the ECB:

“In my view it is clearly a case of state financing when the EFSF is financed from the ECB.


“We have, since Washington, been somewhat encouraged by the seriousness with which European officials are taking the situation, are understanding the situation, the measures that are under consideration for the banking system and to build a firewall around the affected sovereigns, but none of this matters till actions are actually taken, so we await with great anticipation what actions are announced in the coming weeks.”


On emerging market concerns on euro crisis:

“We heard loud and clear that the emerging markets in particular were very concerned about the risk of contagion from advanced economies. There was a consensus around the room that the key priority at this point in time is for the members of the euro zone and Europeans in general to address the overall complex issues. That includes providing enough liquidity, particularly to the sovereign provided that there is the right degree of fiscal efforts on their part.”

On liquidity measures:

“A number of precautionary measures were set up in the crisis triggered by Lehman Brothers, in particular, flexible credit lines. That’s the direction we need to go in, in particular by focussing on short-term liquidity instruments for non-consenting victims of the economic crisis.”

“We have been asked to set up more flexible, short-term instruments that can help countries in good health to resist (the crisis). We are going to make a proposal on this at the leaders summit in Cannes.”


“As regards our SMP (Securities Markets Program), as you know, as with all other non-standard measures, they are designed to be commensurate with distortion of markets and in order to help restore a better transmission of our monetary policy. The SMP decision has been taken by the governing council of the ECB on the basis of the understanding that the 17 heads of states had decided on 21 of July to have an EFSF which will be able to intervene on the secondary market in order to restore financial stability in the euro are.”

“Our working assumption is that when we have, thanks to the new flexible EFSF, financial stability, we do not have to help restore a better transmission of monetary policy.”


“This meeting has been a very important stepping stone towards the Cannes summit. The communique rightly underlines the urgency and need for decisive action to overcome the sovereign debt crisis and restore confidence in our economies.”

On the euro zone crisis:

“In order to break the vicious circle ... we put last week on the table a comprehensive plan, a road map. I am pleased to say this plan received a warm welcome from our G20 partners.”

“We need to maximise the effective lending capacity of the EFSF to expand its firepower. It’s a work in progress.”

On Greece:

“We need to have to have a solution which is indeed lasting and durable and will facilitate the recovery of Greece and the servicing of the Greek debt.

“We will certainly work on the basis of the July 21 agreement and will likely do some technical revision due to change in market circumstances. This is now a work in progress. So we are not reopening the deal, we’re rather revisiting the deal.”


“Europe needs to get its act together because unless the crisis is put to an end, it will start to affect emerging economies which have enjoyed strong growth.”

“The G20 reconfirmed in the communique that excessive exchange rate volatility will have adverse effects on economic stability. Japan’s view on currency moves was thus taken into account.”


“Japan’s economy is picking up but we’re focussing on downside risks given heightening global economic uncertainty and the effect of yen rises.”

“Tackling Europe’s debt problem will contribute to global economic stability and (help ease) yen rises. I’ve urged European nations to make strong efforts in dealing with the problem.”


On euro zone debt crisis:

“No one (in Europe) is asking for our (Russia’s) help. Why should we even discuss this question when Europeans tell us: ‘we will sort ourselves out ourselves’?”


On financial transaction tax idea:

“The majority of countries which expressed themselves were against it, including Russia.”


“We expect inflationary pressures to ease significantly and the economy is doing fine.”

He said South Korea’s official inflation target for 2011 was 4 percent and that he was not worried about capital outflows due to global economic turbulence.

Reporting by Paris G20 team

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