What can the IMF do to help resolve global imbalances?
The IMF initiated the first Multilateral Consultation to focus on reducing global imbalances while sustaining strong global growth. During the 2007 Spring Meetings, the five participants-China, the Euro area, Japan, Saudi Arabia, and the United States-jointly set out their policies aimed at reducing the risk of a disorderly resolution of these imbalances. These policy plans were concrete and mutually consistent. They are also in each participant’s own interests, and some progress has been made on several fronts. This includes a faster-than-expected narrowing of the U.S. budget deficit, rising Saudi public sector investment in key areas, some advance on structural policies in Europe and Japan, and China’s move to increase renminbi flexibility. The key now is sustained implementation. For example, on exchange rates, I believe that a faster appreciation of the renminbi would help alleviate some of the concerns in China about rapid credit and investment growth, while at the same time contr
