IMF members set aside trade split as French vote rattles nerves
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(From left) IMF chief Christine Lagarde, German finance minister Wolfgang Schaeuble and US Treasury secretary Steven Mnuchin ahead of the group photo, April 22, 2017.
PHOTO: BLOOMBERG
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Instead, the International Monetary and Financial Committee (IMFC) statement pledged that members would "work together" to reduce global trade and current account imbalances "through appropriate policies."
Mexican central bank chief Agustin Carstens, the IMFC chairman, said most countries have some trade restrictions and that protectionism was an "ambiguous" term.
"Instead of dwelling on what that concept means, we managed to put it in a more positive, more constructive framework," Carstens told a news conference.
Some officials chose to focus on the brightening global economy instead of the risks posed by the French election, new US trade barriers and Britain's decision to leave the European Union, said James Boughton, a former IMF official.
"There's an awful lot of forced optimism about what these people are saying," said Boughton, who is now with the Centre for International Governance Innovation, a Canadian think-tank."Until the train goes off the tracks, everything looks fine."
US Treasury Secretary Steven Mnuchin called for the IMF to step up its surveillance of members' foreign exchange rates.
President Donald Trump "believes in reciprocal trade deals and reciprocal free trade," Mnuchin told Lagarde in an on-stage interview.
"What that means is that if our markets are open there should be a reciprocal nature to other markets which should be open as well."
CONTINGENCY PLANS
The French election presents free trade advocates with a third potential blow in less than a year after Britain's EU referendum and Trump's election on a platform to restrict imports and protect US jobs.
Trump has voiced support for Le Pen, the National Front candidate who has promised a referendum on France's membership in the EU.
Investors fear that a potential run-off between Le Pen and Mélenchon, who has vowed to end the independence of the European Central Bank, would roil financial markets and drive out capital.
ECB policymaker Ewald Nowotny said on Saturday that the central bank was ready to provide emergency cash to French banks if necessary.
"If there should be problems for specific French banks liquidity-wise, then the ECB has the... ELA, Emergency Liquidity Assistance, but we don't expect, of course, any special movements," Nowotny, who heads Austria's central bank, told reporters at the IMF.
