As the National Association of Manufacturers criticized the International Monetary Fund (IMF) for abrogating its key responsibility of policing currency policies, NAM President John Engler said, "The U.S. Treasury Department is right to press the IMF to be more aggressive with respect to Chinese currency manipulation.
"It's high time for the IMF to do what its charter says it should do - prevent countries from manipulating exchange rates to gain artificial trade advantages," declared Engler, noting that he was appalled by IMF Managing Director Rodrigo de Rato's reported comment that it would be "unrealistic" for the IMF to be more aggressive on currency issues.
"We commend Secretary Snow and Under Secretary Adams for urging the IMF to begin enforcing its own rules," Engler continued, referring to Treasury Secretary John Snow and Under Secretary Tim Adams. "When Adams said the IMF is 'asleep at the wheel on its most fundamental responsibility' - exchange rate surveillance - he was exactly right.
"If the IMF director and the IMF staff are unwilling or unable to do their job and prevent countries from creating huge trade distortions, then the likelihood of countries acting unilaterally is perhaps inevitable," warned Engler. "If not the IMF, who?"
He explained that the IMF Articles of Agreement concluded at the Bretton Woods conference about 60 years ago say that countries shouldn't suppress the value of their currencies by "sustained one-way purchases" of another currency. "If China's purchase of nearly $750 billion (U.S.) to suppress their currency doesn't qualify as a 'sustained one-way purchase,' I don't know what does.
"We need an effective IMF," Engler insisted. "The World Trade Organization is moving aggressively to enforce world trade rules, and it's incumbent on the IMF to begin making comparable efforts on currency rules. The NAM fully supports what the Treasury Department is trying to do, and we hope to hear more from other finance ministries around the world soon."
