Calling global economic turmoil painful, French President Jacques Chirac said on Thursday that rapid reform of the
international financial system is essential if world growth is to
| French President Jacques Chirac says the United States needs to step up cooperation in order to stabilize relations between the dollar, the yen and the euro
Chirac said the international community must strengthen its
ability to deal with crisis prevention to avoid the economic shocks
that have swept through Asia, Russia and Brazil in the past 20
He also said if world financial stability was the objective then
constantly fluctuating currency exchange rates could not be
"Awareness of our vulnerability (to crises) came late, "
Chirac said in a speech at the International Monetary Fund. "It is
painful. Let us accept the consequences and rapidly build the new
financial architecture we so need. We know which reforms must be
Speaking at the start of a two-day working visit during which he
will see President Clinton, Chirac said governments and
international financial institutions must become more open in
disclosing economic information.
"We must adopt a veritable 'highway code' for capital flows, a
code that applies to all, including hedge funds and offshore
establishments," Chirac said.
He also proposed that the private sector become more involved in
solving countries' financial crises rather than waiting for the IMF
to ride in with billion-dollar rescue packages for countries in
Chirac said France wants to host a summit in Paris of the major
IMF members in the fall to officially adopt reforms the major
wealthy nations may agree on at their G-7 summit in Cologne,
Germany, in June.
The purpose of the Paris meeting, Chirac said, "would be to
officially adopt the reforms and give them international
Turning to currency exchange rate policy, Chirac said shifts
between the dollar, Europe's six-week-old euro and the Japanese yen
will dominate the international scene.
"One cannot hope for world financial stability while at the
same time accepting unstable exchange rates," Chirac said. "We
must aim for more stable relations between currencies. This is a
France is anxious to convince Treasury Secretary Robert Rubin
and Federal Reserve Chairman Alan Greenspan that the 11 European
nations that have adopted the euro want closer monitoring of
currency fluctuations but are not pressing to establish formal
target zones to ensure exchange rate stability.
Rubin said Wednesday night there were enormous problems with
setting up such zones, adding it was not the right way to go.
Treasury officials also are skeptical about holding a monetary
summit in the fall.
Chirac is expected to address the same themes Friday when he
meets with Clinton. The two leaders planned a joint mid-afternoon
news conference, Clinton's first since he was acquitted of
In an interview with The Associated Press before leaving Paris,
Chirac said Clinton's acquittal was good for America and good for
the world, which needs strong leadership from Washington.
"May I say I am very glad about it ... personally because I
have great esteem for President Clinton," he said, adding that he
did not think the scandal would damage Clinton's effectiveness as a
Besides global financial reform, Chirac and Clinton will review
military issues, including Kosovo, Iraq and NATO's 50th anniversary
summit in Washington in April.
France is ready to send 4,000 to 5,000 troops to the Serbian
province to police an international agreement. Clinton has said
he's prepared to commit up to 4,000 American troops.