TPP central banks to refrain from currency manipulation
By Paul McBeth
Nov. 6 (BusinessDesk) - The Reserve Bank of New Zealand and its 11 counterparts in the Trans-Pacific Partnership trade and investment pact have agreed to avoid unfair currency manipulation as part of a regionwide push for greater cooperation, adopting an initiative pushed by the US Treasury.
In a joint statement, central bank governor Graeme Wheeler and Treasury secretary Gabriel Makhlouf welcomed a declaration by the 12 monetary authorities, whose principal objective was to avoid unfair currency practices before passing legislation empowering the TPP.
The declaration confirms each country's monetary authority is bound under International Monetary Fund articles to avoid exchange rate manipulation or the monetary system to prevent effective balance of payments adjustments or countries from gaining an unfair comparative advantage. It will also require each central bank to disclose currency and trade flows, and opens up consultations between the authorities.
"These commitments are consistent with New Zealand's policy settings and line up with the commitments New Zealand has made as a member of the International Monetary Fund," Wheeler and Makhlouf said. "New Zealand's sound macroeconomic policy settings and open and transparent approach to data are consistent with the declaration."
The 12 signatories to the TPP – the US, Japan, Canada, Mexico, Chile, Peru, Australia, New Zealand, Malaysia, Vietnam, Singapore, and Brunei – represent about 40 percent of the global economy, and released the full text of the agreement today. The agreements were held under a tight shroud of secrecy, attracting criticism as its provisions go beyond simply removing tariffs and quotas, and into aligning regulatory settings across the nations.
The financial services chapter of the agreement specifically excludes activities by central banks in conducting monetary and related credit policies or exchange rate policies.