Geithner calls for currency cooperation

WASHINGTON, Oct. 6 (UPI) -- U.S. Treasury Secretary Timothy Geithner called for a "cooperative rebalancing" of currency rates ahead of a global economic summit.

Two days before financial leaders are to gather in Washington for discussions at the International Monetary Fund and World Bank, Geithner said it was a "multilateral problem" to have struggling economies enact policies to weaken their currencies in an effort to increase exports.

"A cooperative rebalancing of policy in this direction would be better for overall growth," Geithner said at the Brookings Institute in Washington.

Without naming China, which is under pressure to allow its currency to appreciate, Geithner said there was a need for "economies running current account surpluses to abandon export-oriented policies, let their currencies appreciate, and strengthen domestic demand."

Geithner praised the world's leading economies for the "unprecedented international cooperation" over the past two years that he said has been "effective in restarting economic growth and stabilizing financial markets."

"Global trade is now almost back to pre-crisis levels. Each of our economies is stronger today than would otherwise have been possible, because of the effectiveness of this joint strategy. And the financial reforms now under way will substantially reduce the risk of damage from future financial crises," he said.

The "Framework for Strong, Sustainable and Balanced Growth," established at a financial summit in London in 2009, allowed emerging markets a greater say in IMF and World Bank governance. However, the "Framework" also included an agreement for stronger economies to strengthen domestic demand, which would act as a stimulus across the globe. "We have made some progress on the 'Framework,' but that achievement is at risk … undermined by the limited extent of progress toward more domestic demand-led growth," he said.