Reuters | Oct 9, 2010 | 11:10pm IST
China’s central bank governor Zhou Xiaochuan hit out at rich countries on Saturday, telling the International Monetary Fund that high debts, low interest rates and unconventional stimulus policies were a fundamental global problem and a headache for emerging nations.
"The continuation of extremely low interest rates and unconventional monetary policies by major reserve currency issuers have created stark challenges for emerging market countries in the conduct of monetary policy," said Zhou’s statement to the IMF’s International Monetary and Financial Committee, obtained by Reuters.
Turning the tables on rich countries whose control of the IMF is expected to be diluted under reforms aimed at giving emerging economies more power, Zhou called on the IMF to shift to monitoring advanced countries’ policies, which he said were "more damaging to global economic growth."
"The Fund’s current surveillance framework, which focuses on exchange rate policies, effectively leaves developed countries outside the Fund’s oversight," said Zhou. "Surveillance must be fair and evenhanded," he said, urging the developed countries to step up financial reform.
"The most fundamental problems at present are the slow progress of developed countries in repairing and reforming their financial systems, and the continued reliance on policy support for the stability of the financial sector," he said.
"Considering the enormous amounts of maturing debts and fiscal deficits in developed countries in the current and coming year, sovereign risks could deteriorate at any time, producing systemic effects on the global financial stability," he said.