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ECB must take account of FX in policy

Friday, May 23 17:16:00

The European Central Bank should take account of the euro's exchange rate in its monetary policy deliberations, ECB policymaker Benoit Coeure said on Friday, adding that central banks need to cooperate to avoid a currency war.

In a speech on "Currency wars and the Future of the International Monetary System", Coeure asked whether, from the ECB's perspective, central banks should take account of exchange rates in monetary policy, whether there is a currency war now, and whether international cooperation is needed in this regard.

He replied "Yes, but it's complicated," to the question of whether central banks, in the ECB's view, should look at the exchange rate.

Answering the question of whether there is a currency war, he said: "No. But it may come, so we need a framework for cooperation to prevent it occurring."

The G20 doctrine of avoiding competitive devaluations was still being respected, Coeure told a conference in Paris organised by the Fondation Maurice Allais, adding this situation was a "positive sum game" for the world economy.