European Central Bank president Jean-Claude Trichet on Sunday raised concern about widening global imbalances after the financial crisis, calling them one of the main challenges for the global economy.
Global imbalances
were blamed for contributing to and aggravating the financial crisis and recession that struck the global economy in 2008 and 2009.
'A concern is that after some partial reduction induced by the crisis, global imbalances are starting to widen again,' Trichet said according to a speech text for a ceremony, in which he was awarded the Global Economy Prize 2011 by the Institute for World Economy in the northern German city of Kiel.
Such imbalances raise challenges for international monetary and fiscal cooperation, Trichet said, referring to global imbalances as 'one of the main challenges facing the global economy and the world community'.
Finance ministers of the world's major economies reached a fudged accord in February on how to
measure such imbalances after China prevented the use of exchange rates and currency reserves as indicators.
The United States and other western countries accuse Beijing of keeping the yuan artificially undervalued to boost its exports, hence accumulating massive foreign currency reserves that they say distort the world economy.
Trichet said the euro zone does not contribute to global imbalances, pointing to projections by the International Monetary Fund which see the euro area current account broadly balanced this year and the next, up to 2015.
He pointed out that 'the euro area has a significant stake in effective global re-balancing, notably through sounder domestic policies worldwide which, in turn, would contribute to global external stability'.
The euro zone is struggling with a severe debt crisis, facing its toughest test as it tries to prevent Greece defaulting.
Source : New Age
