LONDON (MNI) – Bank of England Governor Mervyn King warned that
global imbalances have to be addressed or the world’s economic recvoery
will be weak and another financial crisis could be triggered.
In remarks at a Bank of France event King said global imbalances
had been one of the causes of the financial crisis and he urged the G20
to tackle them.
“Global imbalances contributed to the financial crisis and a
rebalancing of global demand is the key to a sustainable recovery,” King
states in the text of his contribution to the event in Paris.
“If we, collectively, do not deal with these problems at best we
will have a weak world recovery and at worst we will sow the seeds of
the next financial crisis. It is in our hands to avoid both those
outcomes,” he said.
King said the world economy remains vulnerable to the risks
associated with imbalances and he said talks should focus on the right
speed of adjustment.
The BOE Governor was downbeat about the pace of progress so far on
addressing the imbalances by advanced economies.
“What is needed now is a ‘grand bargain’ among the major players in
the world economy. A bargain that recognises the benefits of compromise
on the real path of economic adjustment in order to avoid the damaging
consequences of a move towards protectionism,” he said.
“A natural forum in which to strike a bargain is the G20 Framework
for Strong, Sustainable and Balanced Growth. So far, the process has
failed to achieve a move to a better outcome,” he added.
–London newsroom 0044 20 7862 7491; email: drobinson@marketnews.com
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