By David Barwick

WASHINGTON (MNI) – Data make it clear that the global economy has
stabilized, European Central Bank Executive Board member Joerg Asmussen
said late Friday.

“The data show us a clear stabilization in the global economy since
last year,” he told an audience. “The U.S. is showing signs of a
sustained recovery. The data releases have consistently surprised on the
upside throughout the first quarter of this year.”

U.S. unemployment is at a recent low, he noted.

“In the euro area, data confirm a stabilization of economic
activity at low levels,” he said. “So we continue to expect to have a
very mild recession in 2012, and our economy will gradually recover in
the course of the year.”

Strong exports to the U.S. and to emerging markets support this
outlook, he reasoned.

However, he said, “downside risks remain”, mainly due to financial
markets, and “we must very closely monitor the situation in the Spanish
government bond market.”

The rise in Spanish yields “can only be addressed through
consistent and determined reform even if it’s painful in the short
term,” he said. “Spain has obviously a credibility problem with the
markets,” but this is a problem that can be dealt with.

Asmussen noted that Spain had undertaken the “most significant
labor market reform in a generation,” while “Italy has increased
competition and is modernizing its public administration” and “the debt
exchange in Greece was successful.”

Moreover, “Ireland and Portugal have continued to implement the
EU/IMF programs, which are both on track,” he said.

At the level of the EU, Asmussen lauded the reinforcement of fiscal
rules and the two LTROs conducted by the ECB, which “have eased bank
funding pressures” and “over time, should support lending to firms and
to households across the euro area.”

As to whether the LTROS “have swept the world with liquidity,”
Asmussen said that central bank liquidity “is a very specific form of
money” that does not automatically lead to distortions such as on
foreign exchange markets.

“We should not make simplistic assumptions about one factor leading
to another,” he said.

“The LTROs have certainly prevented an abrupt deleveraging,” he
said, even if loans to the private sector only increased 1.1% in
February. Eventually, they should noticeably spur funding of the real
economy, he said.

“When this happens, we will be constantly alert to any threat to
inflation,” he promised. “Our commitment to price stability in the euro
area is firm and credible, and I think that observers recognize this,
and following the two three-year LTRO market indicators of inflation
expectations showed no sign of inflation above our medium-term
objective.”

–Frankfurt newsroom +49 69 72 01 42; e-mail: dbarwick@marketnews.com

** MNI Washington Bureau: 202-371-2121 **

[TOPICS: MT$$$$,M$$EC$,M$X$$$,M$$CR$,MGX$$$]

WASHINGTON (MNI) – The following was issued Friday by the U.S.
Treasury Department:

Today, Secretary Tim Geithner chaired a meeting of finance
ministers and representatives of key international financial
institutions to advance work under the Deauville Partnership with Arab
Countries in Transition, a unique forum launched last year in response
to the historic changes in the Middle East and North Africa.
Participation in the Partnership includes the five transitioning
countries (Egypt, Jordan, Tunisia, Morocco, and Libya), G-8 countries,
Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Turkey, and 10
international financial institutions (IFIs).

The Middle East and North Africa region is undergoing one of the
most important transitions of our time. In the face of numerous
challenges, the five transitioning countries have taken steps to
solidify their movement toward democracy and advance economic
development. However, these countries face growing economic challenges,
including a difficult external environment and, for some countries,
delays in the political transition. The Partnership provides a valuable
platform through which the international community is engaging with and
helping these transitioning countries to achieve their objectives of
inclusive, sustainable growth.

Transition Fund

The Partnership agreed to explore a new Transition Fund that will
provide grants, technical assistance, and knowledge exchange, with due
consideration to bilateral and multilateral assistance, to help
countries strengthen their institutions and develop and implement
home-grown reforms. The United States, United Kingdom, European Union,
Saudi Arabia, France, and Italy agreed to work together with other
partners to advance this initiative.

Capital Markets Access Initiative

Recognizing the importance of assisting countries in maintaining
financial stability, the Partnership agreed to launch a new initiative
to help countries regain access to private capital to spur growth and
unlock potential investments in the region. The Capital Markets Access
initiative aims to help countries like Egypt and Tunisia close their
substantial financing gaps. As part of this initiative, the United
States is moving forward to extend a loan guarantee to Tunisia to
support the issuance of a sovereign bond on international markets.
European Bank for Reconstruction and Development Expansion

In 2011, the Partnership agreed to support the extension of the
geographic mandate of the European Bank for Reconstruction and
Development (EBRD) to the Middle East and North Africa region. To date,
24 EBRD members, including the United States, have taken steps to make
this expansion effective. The Partnership called on all members to
proceed as quickly as possible with ratification of the necessary
amendments. The EBRD will eventually have the capacity to invest as much
as $3 billion Euros a year in the region.

International Financial Institutions Engagement

Last year the IFIs established a dedicated Coordination Platform to
better leverage the collective resources of the 10 IFIs that work in the
region. Today, the Partnership called on these IFIs, which are now
participating in the Partnership, to deliver on their commitments in the
short term, particularly in the area of job creation and small and
medium enterprise (SME) development. Examples of ways in which the IFIs
are providing concrete support to the transitioning countries this year
include:

— The provision of development policy loans to Tunisia
(African Development Bank and World Bank), Jordan (World Bank), and
Morocco (World Bank) underpinning governance, private sector reforms and
domestic markets.

— In Tunisia, the African Development Bank is supporting
SME credit lines and rural infrastructure to support inclusive growth.

— Support for public-private partnerships through the Arab
Financing Facility for Infrastructure, launched last year by the World
Bank and Islamic Development Bank.

— Development of relevant post-secondary education skills
in the region through the International Financial Corporation “e4e
Initiative for Arab Youth.”

** MNI Washington Bureau: 202-371-2121 **

[TOPICS: M$$EC$,M$C$$$,M$U$$$,MN$FX$,MT$$$$,MI$$$$,M$J$$$,M$X$$$,M$A$$$,M$Q$$$]

By Yali N’Diaye

WASHINGTON (MNI) – The European banking sector is as solid as
banking sectors in other regions — including the U.S. — European
Central Bank Governing Council member Christian Noyer said Friday,
estimating there no need for more long-term refinancing operations.

During a joint press conference following the meeting of G20
finance ministers and central bankers, French Finance Minister Francois
Baroin also argued against the IMF’s pessimistic view about France.

In fact, the IMF’s forecasts for France are “excessively
pessimistic,” Baroin said.

In its April World Economic Outlook, the IMF revised up its GDP
growth forecast to 0.5% in 2012 and left it unchanged at 1.0% in 2013.
The forecast for the euro zone is -0.3% this year and +0.9% next year.

Going forward, “We are more than confident” in France’s ability to
meet deficit targets, even after they were revised down to 4.4% of GDP
for this year from 4.5%, Baroin also said. He also expects 2013 deficit
targets to me met.

On the banking side, Noyer disagreed with the International
Monetary Fund’s view regarding French banks’ deleveraging.

Loans are not constrained from the supply side and when there are
loan restrictions, it is due to demand factors.

The reality is that French banks do not do deleveraging in France
and in the eurozone, although they have performed arbitrages and asset
reduction outside. “They have reduced activities in U.S. dollars as have
all banks in the world,” Noyer added.

“I see no reason why there would be a restriction of loan supply,”
he continued.

At the European level, “we know the parts of the banking sector
that are facing difficulties,” Noyer said, citing banks in Greece and
Spain in particular.

“The general pessimistic view about the banking sector in Europe
seems totally out of place to me,” he said.

“The European banking sector, except for these well identified
cases, is as solid as banking sectors of other regions, particularly the
U.S. banking sector,” Noyer argued.

This is especially true when taking into account the accounting or
prudential factors in Europe and in the U.S.

In fact, “there is no reason for more” LTROs, he said, noting the
two that were done fulfilled their role.

“We decided to do two” LTROs, Noyer said, which was announced. The
amount was unlimited and banks took what they needed to address their
particular funding needs. That being said, “we will see in the future if
something is needed.”

Noyer also said the criteria for core Tier 1 capital in the latest
U.S. bank stress tests was much less stringent than the European Banking
Authority stress test.

Both welcomed the increase of resources committed to the
International Monetary Fund, with Noyer pointing out it was a “real
progress” between Thursday evening and Friday morning. It shows a
“general desire” to strengthen the IMF’s resources as risks remain
important for the entire global economy.

In other comments, Baroin welcomed the widening of the Chinese
yuan’s trading band widening.

** MNI Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,M$X$$$,M$$CR$,M$$EC$]

By Ian McKendry

WASHINGTON (MNI) – The ongoing fiscal debate in the United States
is not only a risk to its economy but could also derail the global
recovery, IMF Managing Director Christine Lagarde said Friday.

“[The] United States faces this very difficult situation,” Lagarde
said during a seminar on ‘A Narrow Path for the Global Economy’ hosted
by the IMF.

She said it could be a “very disturbing moment” when U.S. tax cuts
expire and spending is cut-off automatically, all with the backdrop of
the debt ceiling debate.

Christina Romer, the former chair of President Barack Obama’s the
Council of Economic added to Lagarde’s comments, saying “that fiscal
cliff is a very big problem” and that it would be “devastating to the
U.S. economy if we went over that cliff.”

Thursday, during a press conference ahead of the IMF spring
meeting, Lagarde had said “the global economy has entered a timid
recovery but still faces high risks, with some dark clouds on the
horizon.”

Friday, Lagarde said the U.S. fiscal debate was one of the dark
clouds she was referring to, along with rising oil prices and the
European debt crisis.

Romer said the U.S. economy is “stable” and progress has been “much
better” than Europe but that growth has not been strong enough to bring
down unemployment.

** MNI Washington Bureau: 202-371-2121 **

[TOPICS: M$$CR$,MI$$$$,M$U$$$,MFU$$$,MGU$$$]

GBP/JPY was best trade this week, climbing more than 400 pips to 131.40.

A round of applause for Sean Lee, who was calling for longs on Tuesday when GBP/JPY was trading below 128.

He will be here at the weekly open to take a victory lap.

WASHINGTON (MNI) – Europe has achieved its main target by
ensuring an increase in the International Monetary Fund’s resources and
continues to deliver on its own crisis response, European Union Economic
and Monetary Affairs Commissioner Olli Rehn said Friday.

“This is good news for Europe and the world,” Rehn said during a
press briefing following the G20 meeting in Washington.

Apart from securing an increase in the IMF’s firepower, “my main
message to our global partners is that euro area is delivering on its
comprehensive crisis response.”

Rehn noted Spain and Italy are making substantial progress in their
fiscal adjustment and structural reform efforts, noting that this is
particularly important in light of the recent re-emergence of market
pressures.

–Frankfurt newsroom +49 69 72 01 42; e-mail: jtreeck@marketnews.com

[TOPICS: M$$CR$,M$X$$$,M$$EC$,MGX$$$]

–Updates with comments on larger firewall, impact on EMU

WASHINGTON (MNI) – The European Central Bank’s Governing Council
has not discussed following the International Monetary Fund’s advice to
further lower interest rates, ECB President Mario Draghi said Friday.

Asked during a press briefing in Washington what he thought of the
IMF’s view and the wisdom to share these views, Draghi said: “It’s a
free world.” However, the Governing Council has not discussed following
the advice — “at least not recently,” he said.

Draghi stressed the importance of price stability in ensuring
growth and said financial stability should not be underestimated, while
“inflation expectations remain solidly anchored.”

After the G20 and the IMF decided to further boost the IMF’s
resources by around $430 billion, Draghi said the larger firewall will
be a useful tool in helping reduce sovereign debt market tensions.

“Certainly, to have a firewall of this size is a very useful tool
to address what I would call the … excessive volatility of the various
assets markets, especially the sovereign debt markets and the CDS
market,” Draghi said.

However, he stressed that “the structural reforms and the fiscal
consolidation have to be in place.” Without convincing fiscal and
structural reform efforts, no firewall can be large enough, he said.

On this front, Draghi noted that “both Italy and Spain, but also
the program countries are making progress … They will have to continue
working but what they have done already is remarkable. ”

–Frankfurt newsroom +49 69 72 01 42; e-mail: jtreeck@marketnews.com

[TOPICS: M$$CR$,M$X$$$,M$$EC$,MGX$$$]

• IMF announces $430B in firm commitments to new funding, vs $400B exp
• BRIC countries will announce more IMF funding before June G20
• Canadian CPI +1.9% y/y vs +2.0% exp
• ECB’s Weidmann: Outlook now more favorable
• UK kicks in $15B to IMF
• DJ: ECB signaled no more LTROs behind the scenes
• Draghi: ECB hasn’t discussed new measures
• ECB’s Nowotny: Inflation may overshoot target for a period
• ECB’s Constancio: EFSF not needed in Spain now
• Greek revenues trail targets in 2012
• The latest Greek polls
• CHF leads on day, USD lags
• S&P 500 up 0.2% to 1379, gains 0.6% on week

EUR/USD caught an updraft to 1.3210 right at the NY open but it was unable to climb above the two-week high of 1.3213 on the first push and was punched back down to 1.3177. Orders down to 1.3160 and chatter about the larger IMF funding sparked a rebound that eventually pushed through 1.3213 to 1.3225 and then it was a terribly boring chop to close out the day. Technically, it looks as if we will close out above the high, setting the stage for further gains.

USD/JPY tracked fixed income. After a run at 2% in US 10s was beaten back, yields and USD/JPY started a slow move down from 81.75 to 81.50.

GBP was the winner on the week and cable finished strong just shy of 1.6150 after bouncing between 1.6100 and 1.6140 for most of the session.

USD/CAD climbed to 0.9925 from 0.9905 on the CPI data but traded in a 30 pip range for the day, closing at 0.9920.

WASHINGTON (MNI) – The European Central Bank’s Governing Council
has not discussed following the International Monetary Fund’s advice to
further lower interest rates, ECB President Mario Draghi said Friday.

Asked during a press briefing what he thought of the IMF’s view and
the wisdom to share these views, Draghi said: “Its a free world.”
However, the Governing Council has not discussed following the advice —
“at least not recently,” he said.

Draghi also stressed the importance of price stability in ensuring
growth and financial stability and said “inflation expectations remain
solidly anchored.”

more

–Frankfurt newsroom +49 69 72 01 42; e-mail: jtreeck@marketnews.com

[TOPICS: M$$CR$,M$X$$$,M$$EC$,MGX$$$]

By Steven K. Beckner

WASHINGTON (MNI) – Finance ministers and central bank governors of
the Group of 20 nations joined with the International Monetary Fund
Friday in declaring their willingness to act to ensure financial
stability.

“Firm commitments” to increase IMF lending resources by “over $430
billion” were announced in an unusual statement issued jointly by the
G20 and the IMF’s policymaking body — the International Monetary and
Financial Committee.

The $430 billion, which comes from special pledges by Japan,
Sweden, the Nordic nations and others, comes on top of the IMF’s regular
quotas, which are in the process of being doubled to roughly $767
billion. And it comes on top of the roughly $1 trillion European
bail-out or “firewall.”

Additional pledges from other nations may yet be forthcoming.

“We remain committed to take the necessary actions to secure global
financial stability,” the G20-IMF joint statement said, adding, “We
welcome the euro area members’ decisions in March to strengthen European
firewalls as part of broader reform efforts and the availability of
central bank swap lines.”

The one-page statement said the new IMF resources “will be
available for the whole membership of the IMF, and not earmarked for any
particular region.”

“The resources would be channeled through temporary bilateral loans
and note purchase agreements to the IMF’s General Resources Account,” it
said.

The statement vowed that if the resources are used, “adequate risk
mitigation features, conditionality, and adequate burden sharing among
official creditors would apply.”

“This effort, together with the national and regional structural,
fiscal, and monetary actions that have been put in place in the past
months, shows the commitment of the international community to safeguard
global financial stability and put the global economic recovery on a
sounder footing,” the joint statement declared.

In a separate communique of its own, the G20 used nearly identical
wording to assert its commitment to “take the necessary actions to
secure global financial stability.”

The G20 mixed optimism with a heavy dose of caution in assessing
the economic and financial outlook.

“Recent economic developments point to the continuation of a modest
global recovery, supported by some significant policy actions that have
taken place since our last meeting,” the G20 policymakers said. “The
tail risks facing the global economy only months ago have started to
recede.”

“However, growth expectations for 2012 remain moderate,
deleveraging is constraining consumption and investment growth,
volatility remains high partly reflecting financial market pressures in
Europe and downside risks still persist,” they continued, adding that
they “remain committed to further reduce these risks.”

The G20 communique said “high levels of public and private
indebtedness, the need for structural reforms, insufficient global
rebalancing, and persistent unemployment and development gaps continue
to weigh on medium-term global growth prospects.”

“In the context of high unemployment and indebtedness in many
countries, supporting growth and job creation, structural reforms,
restoring medium-term fiscal sustainability and promoting global
rebalancing remain at the core of our commitments,” it said.

The finance ministers and central bankers also agreed that
“protecting investment is crucial for the global recovery” and so
reaffirmed their commitment to avoid protectionism.”

Taking note of high oil prices, the G20 said they “stand ready to
carry out additional actions as needed and welcome the commitments by
producing countries to ensure adequate supply.”

Unlike past G20 communiques which have spoken of the need for “more
market-determined exchange rate systems,” “exchange rate flexibility”
and the need to avoid “disorderly movements” of currencies and
“competitive devaluation of currencies,” the latest communique refrained
from such language — presumably in deference to China, which has
recently taken steps to allow greater appreciation of the yuan.

The only reference to exchange rates came in a section on IMF
surveillance, in which the G20 underscored “the importance of rigorous
surveillance on exchange rate policies” and supported “a more ample
coverage of surveillance activities, where relevant, including global
liquidity, capital flows, capital account measures, reserve and fiscal,
monetary and financial sector policies that could have an impact on
external stability.”

The G-20 policymakers met against a backdrop of furious activity
aimed at defusing the still-ticking European debt bomb.

The Eurozone has beefed up its bailout fund, the European Financial
Stability Facility (EFSF) to nearly $1 trillion, and the International
Monetary Fund has been busy supplementing its lending resources, with
the aim of creating a $500 billion pool of emergency lending reserves.

Meanwhile, the European Central Bank has been lending heavily to
sovereign debt-encumbered European banks through a series of three-year
long-term refinancing operations (LTROs) to ease bank funding strains.
This came on top of the roughly $260 billion of European government
bonds it had bought.

Financial markets stabilized considerably after Greece reached a
debt restructuring deal with its creditors last month, even though the
creditors roughly $130 billion loss constituted a technical default by
the country.

But in recent weeks the focus of concern has turned to heavily
indebted Spain, a far more significant euro-zone country, which has seen
its borrowing costs soar in bond markets.

As the IMF warned in its World Economic Outlook report, “although
the problems there (Greece) and in other economies on the euro area
periphery will likely persist for a long time.”

Earlier this week, Treasury Under Secretary for International
Affairs Lael Brainard told reporters that “recent market volatility
experienced by Spain and others provides a sobering reminder that the
economic adjustments underway in Europe will require sustained effort.”

Brainard said “the euro area will need to strike a careful balance
to avoid a downward spiral. Sustained efforts will be required to
restore growth, repair the banking system, strengthen sovereign balance
sheets and address internal reversals in private capital.”

“Europe must demonstrate a continued willingness to do whatever it
takes to reinforce the foundations of the currency union, including
through fiscal integration,” she added.

But some European policymakers exhibited a bit of ennui with U.S.
calls for more action, particularly German ones.

Following an informal G-7 meeting, German Finance Minister Wolfgang
Schaeuble declared that “Europe has delivered” on promises to stabilize
the euro zone and that it is therefore no longer the “focus” of the
Spring Meetings. And he rejected as “nonsense” calls for Germany to do
more to boost European economic activity.

European Central Bank member Jens Weidmann, appearing with
Schaeuble at a press conference, bristled at what he called “reflexive”
calls for more ECB intervention to aid European debtor nations.

** MNI Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$,M$$BR$]

• Watching markets carefully
• Disorderly FX moves undesirable
• Globally shared understanding that further rise in yen would hurt Japan’s economy

Via Reuters, in response to a question about following the IMF’s advice. Also:

• Spain and Italy making progress
• Inflation expectations solidly anchored

Commitments of Traders report from the CFTC (as of Tuesday’s close):

• Net EUR shorts rise to 118K from 101K
• Net JPY shorts falls to 58K from 66K
• Net AUD longs up to 48K from 39K
• Net CHF short to 14K from 10K
• Net CAD long to 38K from 28K
• Net GBP short to 13K from 19K
• Net NZD long to 12K from 7K
• Net USD longs position down 4%

Slow, steady improvement in GBP positioning since October. It’s likely to cross into positive territory (a bullish signal) if it can sustain the gains from this week.

WASHINGTON (MNI) – The following is a joint statement Friday of the
International Mmonetary and Financial Committee and the Group of 20
Finance Ministers and Central Bank governors:

The International Monetary Fund’s International Monetary and
Financial Committee (IMFC) and the Group of 20 Finance Ministers and
Central Bank Governors issued the following statement today on IMF
resources:

“We remain committed to take the necessary actions to secure global
financial stability. We welcome the euro area members’ decisions in
March to strengthen European firewalls as part of broader reform efforts
and the availability of central bank swap lines. At our Joint Meeting of
the IMFC and G20 Finance Ministers and Central Bank Governors today, we
have reached agreement to enhance IMF resources for crisis prevention
and resolution. This is the result of a broad international cooperative
effort that includes a significant number of countries.

“There are firm commitments to increase resources made available to
the IMF by over $400 billion in addition to the quota increase under the
2010 reform. These resources will be available for the whole membership
of the IMF, and not earmarked for any particular region.

“The resources would be channeled through temporary bilateral loans
and note purchase agreements to the IMF’s General Resources Account.
Should it become necessary to use these resources, adequate risk
mitigation features, conditionality, and adequate burden sharing among
official creditors would apply, as approved by the IMF Board.

“This effort, together with the national and regional structural,
fiscal, and monetary actions that have been put in place in the past
months, shows the commitment of the international community to safeguard
global financial stability and put the global economic recovery on a
sounder footing.”

** MNI Washington Bureau: 202-371-2121 **

[TOPICS: M$$EC$,M$C$$$,M$U$$$,MN$FX$,MT$$$$,MI$$$$,M$J$$$,M$X$$$,M$A$$$,M$Q$$$]

WASHINGTON (MNI) – The decision to further boost the International
Monetary Fund’s financial resources leaves the fund well equipped to
address global challenges, German finance minister Wolfgang Schaeuble
said Friday.

“I welcome the clear decision by the members of the G20 and of the
IMF to support a strengthening of the IMF’s capacities through a
more-than $400 billion increase in its financial resources,” Schaeuble
said.

“This will ensure that the Fund is adequately equipped to tackle
current and future challenges around the globe,” he added. Schaueble has
been keen to end debate about ever larger firewalls both on the European
and on the global level.

–Frankfurt bureau tel.: +49-69-720 142 Email: jtreeck@marketnews.com

[TOPICS: MT$$$$,M$X$$$,M$G$$$,M$$EC$,MGX$$$,MFX$$$,MFGBU$]

WASHINGTON (MNI) – The following is the second and final section of
the text of the Group of 20′s communique, issued at the conclusion of
Friday’s meeting:

8. We reiterate our call upon all countries to join the Global
Forum on transparency and to sign on the Multilateral Convention on
Mutual Assistance. We look forward to an interim report by the OECD for
the Los Cabos Summit on progress made and on a new set of reviews and on
necessary steps to improve comprehensive information exchange. We
welcome the ongoing work by the FSB on adherence to supervisory and
regulatory information exchange and cooperation standards. We support
the renewal of the FATF mandate, sustaining global efforts to combat
money laundering and the financing of terrorism and proliferation of
weapons of mass destruction.

9. As an important complement of the G20 financial regulation
agenda, we agreed to follow through on the five recommendations of the
2011 Global Partnership for Financial Inclusion report, endorsed in
Cannes, and take the financial inclusion agenda forward towards concrete
results and we agreed to present to our Leaders at the Los Cabos Summit
the G20 Basic Set of Financial Inclusion Indicators, which will assist
countries, policymakers and stakeholders in focusing global efforts on
measuring and sustainably tracking progress on access to financial
services globally. We acknowledge the efforts of those G20 and non-G20
countries willing to commit to national coordination platforms and
strategies for financial inclusion under the “G20 Financial Inclusion
Peer Learning Program” at the Los Cabos Summit as well as the ongoing
efforts and the importance of coordinated support, policy advice and
technical assistance by GPFI implementing partners, other stakeholders,
including the UN, and bilateral donors and request their continued
support to national strategic planning, implementation and data
initiatives in support of financial inclusion. On financial education we
recognize the importance and relevance of the work that the OECD, its
International Network on Financial Education (INFE), and the World Bank
have been doing in this topic and look forward for the OECD/INFE High
Level Principles on National Strategies for Financial Education to be
presented to our Leaders for their consideration at the Los Cabos
Summit. For advancing our financial consumer protection agenda we
recognize the importance of the International Financial Consumer
Protection Network (FinCoNet) as a global network of market conduct
financial authorities. We also ask the G20/OECD Task Force on financial
consumer protection to develop with the FSB effective approaches to
support the implementation of the High Level Principles endorsed in
Cannes, and recognize the importance of an active participation in this
process. We recognize the need for women to gain access to financial
services and financial education, and call for the GPFI and OECD/INFE to
identify additional barriers women may face.

10. We welcome the participation of the International Organizations
on the assessment of the macroeconomic impacts of excessive commodity
price volatility on growth and their identification of policy options
that countries could consider as per their national circumstances to
mitigate any such effects. We will report to Leaders in Los Cabos on
these policy options and their implications for our national agendas.

11. We reaffirm our commitments to enhance the transparency and
functioning of energy markets. We will work to improve the JODI-Oil
database and work on applying the same principles to JODI-Gas, and to
rationalize and phase out inefficient fossil fuel subsidies over the
medium term, while providing targeted support for the poorest, and
report on progress made to our Leaders in Los Cabos. We look forward to
the IOSCO progress report on the implementation of its Principles for
the Regulation and Supervision of Commodities Derivatives Markets at our
next meeting in November. We welcome the consultation by IOSCO on the
functioning and oversight of price reporting agencies and look forward
to an update on their emerging recommendations for leaders in Los Cabos.

12. We received the preliminary report prepared by the OECD, the
World Bank and UN on inserting green growth and sustainable development
policies into structural reform agendas and look forward for the final
version to be delivered to our Leaders. We welcome G20 countries
voluntary self-reporting on current actions to integrate green growth
and sustainable development into structural reform agendas.

13. We will continue to work on climate finance with the
establishment of a G20 study group to consider ways to effectively
mobilize resources and support the operationalization process of the
Green Climate Fund taking into account the objectives, provisions and
principles of the UNFCCC.

14. We appreciate G20 countries contributions and involvement in
promoting Disaster Risk Management (DRM), and welcome the efforts made
so far by the World Bank and OECD, with support from the UN to prepare a
compilation of country experiences to be presented to our Leaders in Los
Cabos, and towards having, by November, a voluntary framework aimed to
facilitate the assessment of risk and financial strategies towards
implementing DRM.

(2 of 2)

** MNI Washington Bureau: 202-371-2121 **

[TOPICS: M$$EC$,M$C$$$,M$U$$$,MN$FX$,MT$$$$,MI$$$$,M$J$$$,M$X$$$,M$A$$$,M$Q$$$]

WASHINGTON (MNI) – The following is the text of the Group of 20′s
communique, issued at the conclusion of Friday’s meeting:

Final Communique

1. We, the G20 Finance Ministers and Central Bank Governors, met to
assess progress on the fulfillment of the mandates given to us by our
Leaders and to address ongoing economic and financial challenges and
promote robust growth and job creation.

2. Recent economic developments point to the continuation of a
modest global recovery, supported by some significant policy actions
that have taken place since our last meeting. The tail risks facing the
global economy only months ago have started to recede. However, growth
expectations for 2012 remain moderate, deleveraging is constraining
consumption and investment growth, volatility remains high partly
reflecting financial market pressures in Europe and downside risks still
persist. We remain committed to further reduce these risks. High levels
of public and private indebtedness, the need for structural reforms,
insufficient global rebalancing, and persistent unemployment and
development gaps continue to weigh on medium-term global growth
prospects. In the context of high unemployment and indebtedness in many
countries, supporting growth and job creation, structural reforms,
restoring medium-term fiscal sustainability and promoting global
rebalancing remain at the core of our commitments. In addition,
protecting investment is crucial for the global recovery and, in
accordance to the mandate by our Leaders in Cannes, we reaffirm our
commitment to avoid protectionism. Vigilant of high oil prices, G20
members stand ready to carry out additional actions as needed and
welcome the commitments by producing countries to ensure adequate
supply.

3. We have made progress in implementing the commitments
established in the Cannes Action Plan for growth and jobs, as well as
taken additional actions consistent with our shared objectives for
strong, sustainable and balanced growth. These commitments remain fully
relevant. Complete and timely implementation is critical, though more
needs to be done. We agreed today on the main elements of the
accountability assessment that will be carried out in order to enhance
monitoring of the implementation of our commitments, as mandated by our
Leaders in Cannes. We have also agreed on the main priority areas for
further policy actions that should be reflected in the Los Cabos Action
Plan that will be announced by our Leaders in June, including on fiscal,
financial, structural, monetary and exchange rate, trade and development
policies. We took note of a preliminary report by the international
organizations on how the G20 framework can contribute to job creation,
with the final report being presented at the Los Cabos Summit. These are
important initiatives as increasing growth, infrastructure financing,
employment and social inclusion are at the heart of all our actions.

4. We remain committed to take the necessary actions to secure
global financial stability. We welcome the euro area members’ decisions
in March to strengthen European firewalls as part of broader reform
efforts and the availability of central bank swap lines. Together with
the IMFC we have reached agreement to enhance IMF resources for crisis
prevention and resolution. This is the result of a broad international
cooperative effort that includes a significant number of countries.
There are firm commitments to increase resources made available to the
IMF by over $430 billion in addition to the quota increase under the
2010 Reform. These resources will be available for the whole membership
of the IMF, and not earmarked for any particular region. The resources
would be channeled through temporary bilateral loans and note purchase
agreements to the IMF’s General Resources Account. Should it become
necessary to use these resources, adequate risk mitigation features,
conditionality and burden sharing among official creditors would apply,
as approved by the IMF Board. This effort, together with the national
and regional structural, fiscal, and monetary actions that have been put
in place in the past months, shows the commitment of the international
community to safeguard global financial stability and put the global
economic recovery on a sounder footing.

5. We reaffirmed our commitment to fully implement the 2010
Governance and Quota Reform by the 2012 IMF/World Bank Annual Meeting.
We will continue to contribute towards a comprehensive review of the IMF
quota formula by January 2013 and the completion of the next general
review of quotas by January 2014, fulfilling the commitments made in
Seoul and Cannes. We reaffirm that the distribution of quotas should
better reflect the relative weights of IMF members in the world economy
which have changed substantially in view of strong growth in dynamic
emerging markets and developing countries.

6. We welcome recent initiatives on IMF surveillance, and agree
that the current surveillance framework should be significantly
enhanced. This process should help achieve a better integration of
bilateral and multilateral surveillance, with a focus on global,
domestic and financial stability, including spillovers from countries
policies. This could be achieved through a careful use of Article IV
consultations. We welcome the progress by the IMF in advancing
consideration of an integrated surveillance decision and commit to
support the decision process. We underscore the importance of rigorous
surveillance on exchange rate policies and support a more ample coverage
of surveillance activities, where relevant, including global liquidity,
capital flows, capital account measures, reserve and fiscal, monetary
and financial sector policies that could have an impact on external
stability. We welcome the ongoing work to produce an external sector
report, which would strengthen multilateral analysis and enhance the
transparency of surveillance. We also recognize that political ownership
and traction is critical to effective surveillance, and that the IMFC
has a role in facilitating the active involvement of all IMF members. We
call on the IMF to address issues that constrain effective surveillance
as identified by the IEO.

7. We assessed progress on the implementation of our financial
regulatory reform agenda as outlined in our February 2012 Communiqu in
order to deliver on our commitments looking ahead to the Los Cabos
Leaders’ Summit, and reaffirmed our commitment to common global
standards by pursuing the financial regulatory reform agenda according
to our agreed timetable in an internationally consistent and
non-discriminatory manner. We take note of the work to date by the FSB
and BCBS on the modalities for extending the SIFI framework to domestic
systemically important banks (D-SIBs), and look forward to the
completion of this work by November 2012 and welcome the FSB progress
report on strengthening the oversight and regulation of the shadow
banking system to mitigate potential systemic risk and look forward to
its final recommendations by end-2012. We support the work of the
Working Group on FSB Capacity, Resources and Governance to put the FSB
on an enduring organizational footing while preserving the strong links
with the BIS and look forward to Leaders receiving the Group’s
recommendations in June 2012; the work coordinated by the FSB to provide
safeguards supportive of a global framework for central counterparties
(CCPs) as an important element in achieving the agreed OTC derivatives
reforms, so that authorities can make informed decisions on the
standards and requirements of CCPs to meet by end-2012 their commitment
that all standardized OTC derivatives be centrally cleared in CCPs with
the appropriate safeguards; and the efforts of the IASB and FASB to
achieve convergence to a globally accepted set of high quality
accounting standards and urge them to meet their target of issuing
standards on key convergence projects by mid-2013, at the latest, in
order to achieve a single set of high quality international accounting
standards. We look forward for the completion of the study, coordinated
by the FSB with the IMF and the World Bank, to identify the extent to
which the agreed regulatory reforms may have unintended consequences for
Emerging Markets and Developing Economies. We support the work of the
FSB on the global governance framework for the legal entity identifier
and look forward to its recommendations in June on establishing a global
LEI system. We support work on developing for consultation,
internationally consistent standards on margining for non-centrally
cleared OTC derivatives by June 2012.

-more- (1 of 2)

[TOPICS: M$$EC$,M$C$$$,M$U$$$,MN$FX$,MT$$$$,MI$$$$,M$J$$$,M$X$$$,M$A$$$,M$Q$$$]

• Says the IMF funding deal recognizes the European firewall efforts
• Bundesbank views were ratified by the funding deal

Canada and US refused to add funds because they said Europe wasn’t doing enough.

According to the final G20 communique.

• ‘Downside risks still persist’ in world economy
• G20 sees modest global recovery
• ‘Vigilant’ on oil markets, will act if neded
• Welcomes strengthened eurozone firewall
• Lagarde says she looks forward to ‘further commitments’
• Full text

The $430 billion is the only new part, the rest was leaked earlier.

Separately, Brazil’s Mantega says BRIC countries will make IMF pledges before the June G20 summit. So it looks like the firewall will be close to $500 billion when all is said and done.

I don’t know if he put the emphasis on the ‘now’ but I will.

Spanish yields climbed above 6% today once again before settling at 5.96%. There is absolutely no way Spain can continue to finance its deficits at these levels and the economy is being crushed by austerity.

So the question is ‘when’? Spain has already raised more than 50% of its target for the full year so they can continue to muddle along at these levels for the rest of the year if everything goes as planned. If there are any unforeseen problems and yields get back over 7%, they’ll need the money.