France wants a wide international debate as it takes over the G20 presidency to drive its plans for an overhaul of the global monetary system and economic governance, Economy Minister Christine Lagarde said on Saturday.
Lagarde told a meeting of some of France's top economic policymakers and thinkers that the 2008-09 crisis had shown the need to rethink a monetary framework based on 40-year-old ideas that are increasingly outdated.
France wants to focus on ways to control the huge and erratic shifts in capital that buffet emerging economies and on moving away from the dollar as a reserve currency to a diversified system that would reduce imbalances.
Lagarde suggested the International Monetary Fund could act as a referee to control capital flows, rather than having countries unilaterally impose restrictions. She also said France would push the idea of the IMF's Special Drawing Right accounting tool playing a bigger role as a reserve unit.
I'm convinced at this point in time, now that the height of the crisis is behind us, that we need to step back, we need to take stock and we need to work now toward more substantial, more structural changes that are needed, Lagarde told a forum hosted by the Paris-based Reinventing Bretton Woods Committee.
France does not have the ambition to propose ready-made solutions ... We don't have a magic stick, she added.
Everybody will have a bias because you look at the world from your own angle and we need to take all angles into perspective ... So it will be an interactive, inclusive process that will take us to other places around the world to get views.
G20 A PERMANENT FORUM
Since taking the reins of the Group of 20 last month President Nicolas Sarkozy has met the leaders of China and India to discuss his plans, and China has agreed to host a seminar of experts early next year on redrawing the monetary framework.
Some critics are skeptical about how much headway Sarkozy can make in a year -- particularly with a debt crisis wreaking havoc in the euro zone -- but Lagarde said some 42 crises of sudden stops in international capital flows in the last 20 years showed the need to address flaws in the system.
The year 2010 was a transition year probably to a more permanent forum for enhanced economic cooperation, she said of the role of the G20, which has eclipsed the G7 in economic matters due to its incorporation of developing-world countries.
The French government is expected to lay out its G20 plans in more detail toward the end of January.
One element Paris wants to push is weaning the world off its reliance on the dollar, something it has support on from emerging powers such as China and Brazil.
Regarding controls on capital flows in and out of emerging economies, Lagarde said they should be used in exceptional circumstances and in a coordinated way to stem damaging swings.
Who will have the ability and the authority to say (that a particular) capital control is appropriate, adequate and is the right response to a capital surge? she said.
This very fine balancing point has to be decided by someone who acts as a referee. Who can that referee be? I don't know. One of the options is clearly the IMF which has the technical expertise to do so.