France will use its presidency of the Group of 20 major world economies next year to work for a global currency system that relates exchange rates to purchasing power, the country's markets regulator said on Friday.
In an interview with Reuters, Jean-Pierre Jouyet said the United States and Japan could share with France an interest in creating some sort of international monetary system despite Washington's commitment to exchange rates being set by markets.
"At the heart of the G20 will be the monetary challenge - how do you move from a G7-G8 world to a G20 in terms of exchange rate regulation," said Jouyet, a former head of the French Treasury and junior minister for European affairs. "Apart from the French, those who believe in it when it's in their interest are the Americans," he said.
Japan too had a record of using currency market intervention to keep the yen competitive, he said. Co-ordinated action to realign major world currencies last occurred a decade ago when the US, European and Japanese central banks intervened to stop the euro's decline after the single European currency fell to a record low of 82.25 cents in October 2000, the year after its launch.
The euro now stands at around $1.25 after hitting a peak of $1.6038 in July 2008.
France has long favoured a managed currency to keep its exports of aircraft and farm produce competitive. But for most US, British and German policymakers, it is an article of faith that markets should determine exchange rates freely.
However, Jouyet said US President Barack Obama would need relative exchange rate stability to achieve his economic competitiveness and growth objectives in the second half of his term.
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