BASEL, Switzerland — Central bankers of major industrialized countries urged governments Monday to adopt spending policies to smooth imbalances in the world financial system and promote exchange-rate stability.
They promised that they would provide the monetary backing.
"It is important for governments to adopt fiscal policies which would eliminate existing balance of payments imbalances and help promote exchange-rate stability," the bankers said in a statement released after a Group of 10 meeting at the Bank for International Settlements (BIS).
The bankers, who met against the background of a falling dollar, suggested no major policy changes in their statement but seemed to join the chorus recommending that the United States reduce its budget and trade deficits while West Germany and Japan encourage domestic consumption and imports.
"They (the central banks) are ready to support these objectives with appropriate monetary policies," said the statement, signed by Karl Otto Poehl, West German Bundesbank president and chairman of the Group of 10 governors.
The U.S. Federal Reserve has pushed interest rates down by supplying increased reserves to the banking system since the Oct. 19 stock market crash. Rates have also come down in Europe, but Washington is believed to be keen on seeing a further fall in key West German interest rates as a sign that the Germans are prepared to stimulate their economy.
The bankers' statement did not give any more details and fell short 2of the detailed policy statement that analysts said would have been necessary to calm foreign exchange markets.
The central bankers, among them newly appointed U.S. Federal Reserve Board Chairman Alan S. Greenspan and Bank of Japan's Satoshi Sumita, have virtually refused to talk to the press since arriving here Sunday. Given the current turbulence on financial markets, an ill-chosen word by a central banker could have moved the markets, analysts said.
"Your presence here is not constructive," complained Bank of England governor Robin Leigh-Pemberton to reporters after emerging from one of Sunday's informal meetings.
Greenspan, Sumita and Poehl held informal meetings Monday morning before the formal G-10 meeting in the afternoon. Sumita told reporters he had met Greenspan and they had agreed on the need for stable exchange rates.