PARIS-Federal Reserve Chairman Ben Bernanke yesterday urged countries with large trade surpluses like China to let their currencies rise in value to help prevent another global financial crisis.He also called on nations with persistent trade deficits like the US to narrow their budget shortfalls and save more.Both steps would help balance trade and investment flows among countries, Bernanke said. Many countries worry about speculative money flooding their economies and inflating assets like real estate or stocks.
"None of these changes will be easy or immediate," Bernanke said.The flow of capital and global imbalances more generally were on the table at the Group of 20 industrialised and emerging nations meeting in Paris yesterday and today. Bernanke and Treasury Secretary Timothy Geithner will represent the US."If there is no stabilising system, then you can have situation where like today, you have a two-speed recovery and demand is not optimally allocated around the world," Bernanke said in a question and answer session following his speech.
Emerging economies like China are growing quickly, while industrialised countries like the US are expanding only slowly. In his call for a rebalancing of the global economy, the Fed chairman singled out no specific countries. Instead, he urged those with large trade surpluses to let their currencies rise freely, encourage consumers to spend more and rely less on export-led growth. (AP)