RBNZ's Bollard says WTO could have oversight role in global forex markets
By Paul McBeth
Aug. 30 (BusinessDesk) - The World Trade Organisation could be a global oversight body to improve international
practices for foreign exchange as the unorthodox monetary policies in the world's biggest economies creates market
uncertainty, says Reserve Bank Governor Alan Bollard.
Central banks that have embarked on quantitative easing have "clearly been having an effect on capital flows and
exchange rates in other countries," including New Zealand where the kiwi dollar has stayed persistently high since the
2008 global financial crisis, Bollard told an academic audience in Wellington.
"There must be ways we could incentivise better exchange rate practices in countries and put boundaries on acceptable
behaviour," Bollard said.
Though he didn't have any magic solutions, Bollard floated the idea of the WTO as a potential supervisor to "look at the
economic conditions and exchange rate behaviour" to improve the global currency framework.
Bollard has said the New Zealand dollar is unsustainably high given the country's current account deficit, hindering
local manufacturers who are competing with cheaper imports.
The kiwi has climbed 16 percent on a trade-weighted basis to 72.19 since the collapse of Lehman Bros in September 2008,
and the central bank is forecasting it to fall to 66 by March 2015.
Bollard was critical of the governance of the International Monetary Fund saying Europe had too great an influence on
the global lending agency given the region represents 7 percent of the world's population but holds 33 percent of the
IMF's voting power.
"More needs to be done with the IMF's voting and quota reform," he said.
The speech to Victoria University of Wellington's institute for governance and policy studies was on governance in
international financial markets and the lessons to be taken from the global financial crisis.
Bollard steps down from central bank next month after a decade-long term. He hasn't publicly declared his next career
move, though Britain's Spectator magazine has suggested he could replace outgoing Bank of England Governor Mervyn King.
(BusinessDesk)