The rising volatility in reserve currencies is a sign of the global financial system's instability, Russian Deputy Prime Minister Alexei Kudrin, who is also the country's finance minister, said at the fifth Russia - EU Dialog plenary session on financial and macroeconomic policy.
"Unilateral attempts by some countries to control exchange rates in order to even out their balances of payments and stimulate economic growth are of particular concern," Kudrin said.
At the same time, the reasons for global imbalances lie not just in currency regulation, he said. "The main reason probably lies in the varied ability by various companies to compete and their varied specializations in one sector or the economy or another," Kudrin said. For this reason, "trade imbalances are primarily structural in nature," Kudrin said.
Another reason for the imbalances lies in the stimulatory monetary policy adopted by some developed countries, above all the United States. The surplus liquidity that they are creating poses a major problem for countries with emerging markets as it stimulates significant capital inflow to their financial markets, Kudrin said.
Kudrin said sustained global economic recovery involved restoring the confidence in financial institutions and regulatory bodies which was undermined in the crisis period. For that to happen it is necessary to conduct reforms in the field of financial sector regulation and oversight, he said. In this respect, Russia backs the efforts by the Financial Stability Council, the Basel Committee, International Organization of Securities Commissions and other oversight bodies, he said.
Russia is closely monitoring efforts that are due to be rounded off by January 1, 2011 to set up new supra-national financial markets oversight bodies in Europe, Kudrin said.
