ECB policymakers warned global central bankers on Friday that economic imbalances could worsen fast unless the G-20 makes a concerted push to tackle them.
Axel Weber, soon to quit as head of Germany's Bundesbank, told a meeting of U.S., euro zone and Asian policymakers that IMF forecasts pointed to renewed divergences in current account positions and that the surge in oil prices since unrest broke out across North Africa would accelerate this month.
ECB governing council member Mario Draghi added that global mismatches would remain a problem for long time to come.
Imbalances between wealthy and emerging nations are proving one of the biggest headaches for policymakers striving to repair the world economy after the most damaging crisis in decades and reduce the risks of future shocks.
"Current account surpluses have returned or are currently returning to pre-crisis levels and I think this will be sped up by the fact that the recent hike in oil prices might accelerate," Weber said.
Draghi told the meeting: "These imbalances will stay with us for a long, long time.
"What we need then is to make sure that capital markets function to finance these imbalances ... because we know they are not exactly efficient, so we need rules, we need a resilient financial system."
Weber also said currencies in many emerging economies remained undervalued and urged the United States to save more to curb its reliance on foreign capital.
They were addressing a dozen global policymakers who joined academics and businessmen under the banner of France's Group of 20 presidency to discuss imbalances, regulation, inflation and other topics two weeks after G-20 finance ministers fixed a set of indicators to measure imbalances.
"We are not trying to find the perfect financial system," French Finance Minister Christine Lagarde said.
"We want better coordination of economic policies. We want to reduce the need to accumulate international reserves. We need to get to the roots of why emerging markets feel the need to accumulate reserves," she said.
"We need to work better on the financial safety net, we need to do a good job, they need to be easy to use and not associated with the IMF stigma."
The finance ministers of the world's major economies succeeded only in reaching a fudged accord on how to measure global imbalances after China prevented the use of exchange rates and currency reserves as indicators.
"The G-20 is the only group that basically has legitimacy to own this process (of tackling imbalances) and drive forward and achieve results," Weber said.
"We have to start passing a judgment on what the disequilibrium is. We have to embark on mechanisms to deal with these current account problems and come up with a surveillance process to make sure countries that commit to certain processes at the national level see these policies through."
Regulation, Inflation Hot Topics
Friday's gathering came a day after the European Central Bank said it could soon raise interest rates, heightening concerns about the implications for struggling euro zone countries as EU leaders strive to resolve the debt crisis.
ECB board member Lorenzo Bini Smaghi said the world had a tendency to systematically underestimate inflation and overestimate growth in developed economies.
"If we look at the past at the kind of forecast errors which have been done and here I look at the IMF forecast errors ... we have systematically underestimated inflation and overestimated growth in advanced economies," he said.
China and other Asian and Latin American economies are resisting pressure from Washington and Europe to raise their interest rates to curb signs of overheating in their economies and allow their currencies to appreciate.
Many of them point the finger squarely at the U.S. Federal Reserve's new round of money printing via a $600 billion bond purchase program as the root cause behind a wave of "hot money" inflows that risk destabilizing their economies.
"Policies of major reserve issuing currencies have an enormous impact on other countries," Chinese deputy central bank governor Hu Xiaolian said.
Opening Friday's conference, Bank of France Governor and ECB governing council member Christian Noyer said the accumulation of foreign reserves by emerging economies was part of the reason behind the globalized crisis.
He also told policymakers that the G-20 still had significant room to press ahead with financial regulation, particularly on the structure of commodities markets and tighter regulation of the "shadow banking system."
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