Christine Lagarde

(Russia’s central bank has said that the world’s leading economies are on the brink of a currency war to keep up with Japan and Japan’s use of the devaluation to boost their competitiveness. Germany’s finance minister has also said he is concerned about the impact on global liquidity of Japanese monetary policy. What are your thoughts on the possibilities of a currency war, and on Japan’s monetary policy that seem to be aimed at weakening the yen?)

… we’re not supportive in any shape or form of any such attempt to create competitiveness devaluation and open currency wars. I think if only the risk of retaliation should actually prevent anybody to go into that sort of monetary policy. There are multiple ways to improve competitiveness, other than to use currencies as a tool. So, I think that really summarizes the position of the institution.

(And, if I may, with your approval, Japan. Is their defense of the yen and the desire to continue to depreciate it supported by the IMF?)

On Japan, well, clearly, that sort of recently announced fiscal and monetary package is intended to create growth in the short term. We don’t think that, pending a medium term, solid anchoring that would actually indicate the determination to change the debt trajectory, and reduce the deficit, it is particularly appropriate, because we see any such measure as being part of an overall package and there is clearly one part of the package that is missing. Monetary policy with a different inflation target is in and of itself certainly a good and interesting project, if associated with clear independence of the central bank.