Volcker Says Crash Shows Need for Coordination
Former Federal Reserve Board Chairman Paul A. Volcker said Monday that the recent dramatic drops in stock markets worldwide showed the need for major countries to better coordinate their economic policies.
He also urged that economic policy-makers pay more attention to currency exchange rate stability, adding that free-floating exchange rate arrangements could not solve all problems.
Volcker was speaking to 500 delegates attending the 40th anniversary celebration of the General Agreement on Tariffs and Trade, the 95-nation body dominating world commerce.
“Now I am happily free of all official responsibility,” he noted, and described himself as a “monetary has-been”.
Volcker made his comments on exchange rates at a time when the dollar was under renewed pressure on world markets, trading at new postwar lows against the West German mark and Japanese yen, at around 1.6350 marks and 132.20 yen.
He called on nations with large trade surpluses--clear references to Japan and West Germany--to play a bigger role in reforming the global trade regime. This would help quash protectionist pressures, especially in the United States.
That notwithstanding, he dropped references in his prepared text to the huge U.S. budget deficit and the need for countries with large trade surpluses to promote domestic expansion. This may have been in deference to his successor Alan Greenspan.