IMF chief Strauss-Kahn interview with Thomson Reuters

WASHINGTON (BestGrowthStock) – The following are highlights from a Thomson Reuters Newsmaker event with International Monetary Fund chief Dominique Strauss-Kahn.

STRAUSS-KAHN ON CURRENCY WARS:

“Certainly the renminbi, the Chinese currency, is substantially undervalued. We’ve been saying this in the IMF for years. Anything that can be done to have this currency going back to its appropriate value would help. But to believe that there is a kind of silver bullet that will solve all the economic problems on the planet just because the Chinese currency will go back to its appropriate value is a bit of a dream.

“It won’t solve a lot of problems in this country, for instance. You have here a huge deficit for decades which has nothing to do with the Chinese currency. Many will argue all across the world that it’s unfair that the U.S. was able to have this policy with this huge deficit while other countries had to fix their own problems and their own deficits.

“So fairness is not really the problem.”

STRAUSS-KAHN ON G20:

“I think that the G20, as I said before, emerged during the crisis as the main body where this kind of cooperation can take place, and it was very effective at the climax of the crisis. The next presidency of the G20 will be the French one, and I think that there are many things on the table that have to be done and could help to rebuild this coordination.

STRAUSS-KAHN ON POTENTIAL RUN FOR FRENCH PRESIDENCY:

“I’m so surprised you asked this question. You know, I have a job. And I try to do my job, instead of a part time, so I won’t have time to think of something else.

STRAUSS-KAHN ON CHINA:

“The question is how can we convince the Chinese and I think we are in a process of convincing them that it is in their own interests (to shift) policy … to a model of growth more based on domestic consumption…It is going to take some time.

“It is somehow a bit of a dream to believe all the imbalances in the world are going to be solved by this. There is also a lot to do in the U.S. economy.”

STRAUSS-KAHN ON SPAIN:

“The medium-term prospects of Spain are rather good, but of course they’re facing today a lack of confidence and still have probably things to face in the banking sector.

“But I feel the government is addressing the problems of the country. I don’t see that the risks for Spain will be that big in 2011. It doesn’t mean there is no risk. … Things may happen, downside risks may materialize, but I’m not that pessimistic about the Spanish economy.

STRAUSS-KAHN ON THE U.S. ECONOMY AND FISCAL POLICY:

“Yes, I would be looking for as much stimulus as possible because, again, growth is the main problem to fix. But, but having in mind always that there is no free lunch. And so what you do today has to be repaid later on. And you cannot just do it now without saying, ‘How are you going to repay it?'”

STRAUSS-KAHN ON JOINT EURO BOND:

“Well it’s a big discussion today about the euro bonds. The main idea of the eurobonds is that you have an institution, which is the European Union, there’s no reason why the institution will not raise money by itself, rather than going through the different countries. … A lot of the political problem behind this is to give more power to the center…

“If (we) find a common agreement among the players to increase the power of the center, then the euro bonds may be a useful tool. But you cannot start with the eurobonds. The question is not the tool, the question is the political will to do this and the treaty, because of the existing treaty today doesn’t make it really possible to increase the power at the center.”

STRAUSS-KAHN ON EURO SURVIVAL:

Asked if he worries at all if the euro might not survive:

“No. There’s a reason for that. It’s a strong currency which behaved during the last 10 years better than even the Deutsche Mark in the previous decade. I see many reasons why there may be a problem in the euro zone in terms of growth, unemployment, even, beyond unemployment, social problems … but that doesn’t mean at all that I see any threat to the euro.” Any solution other than the euro would be worse for the euro zone members.”

STRAUSS-KAHN ON OUTLOOK FOR 2011:

“The point is the recovery is very uneven. Depending on what you’re looking at you’ll find different situations. In Asia obviously, South America things are going rather well, even better than rather well.

“The bad news is coming from southern Europe, where the growth is sluggish. … What’s happening in the United States is very uncertain and will have a lot of influence on the global outcome. So the question of growth in the United States and the way finally it will pick up strongly or. … I don’t believe in the double dip story, but a slowdown that’s the most important thing the global economy will have to face in the coming months.”

STRAUSS-KAHN ON EUROPEAN DOMINO EFFECT, MARKET REACTION:

“I’m worried and that’s why I’m urging the Europeans to provide for a comprehensive solution, because this piecemeal approach, obviously doesn’t work. And the markets are just waiting for what’s next.

“All this takes time, that’s probably the main problem these days.”

“One of the results of this crisis will be to enhance the institutions of the euro zone and make them more resilient and more able to cope with a future crisis.”

IMF chief Strauss-Kahn interview with Thomson Reuters