Lagarde told a meeting of some of France's top economic
policymakers and thinkers that the 2008-09 crisis had shown the need to rethink
a monetary framework based on 40-year-old ideas that are increasingly outdated.
France wants to focus on ways to control the huge and
erratic shifts in capital that buffet emerging economies and on moving away
from the dollar as a reserve currency to a diversified system that would reduce
imbalances.
Lagarde suggested the International Monetary Fund could act
as a referee to control capital flows, rather than having countries
unilaterally impose restrictions. She also said France would push the idea of
the IMF's Special Drawing Right accounting tool playing a bigger role as a
reserve unit.
"I'm convinced at this point in time, now that the
height of the crisis is behind us, that we need to step back, we need to take
stock and we need to work now towards more substantial, more structural changes
that are needed," Lagarde told a forum hosted by the Paris-based
Reinventing Bretton Woods Committee.
"France does not have the ambition to propose
ready-made solutions ... We don't have a magic stick," she added.
"Everybody will have a bias because you look at the
world from your own angle and we need to take all angles into perspective ...
So it will be an interactive, inclusive process that will take us to other
places around the world to get views."
Since taking the reins of the Group of 20 last month
President Nicolas Sarkozy has met the leaders of China and India to discuss his
plans, and China has agreed to host a seminar of experts early next year on
redrawing the monetary framework.
Some critics are skeptical about how much headway Sarkozy
can make in a year — particularly with a debt crisis wreaking havoc in the euro
zone — but Lagarde said some 42 crises of "sudden stops in international
capital flows" in the last 20 years showed the need to address flaws in
the system.
"The year 2010 was a transition year probably to a more
permanent forum for enhanced economic cooperation," she said of the role
of the G20, which has eclipsed the G7 in economic matters due to its
incorporation of developing-world countries.
The French government is expected to lay out its G20 plans
in more detail toward the end of January.
One element Paris wants to push is weaning the world off its
reliance on the dollar, something it has support on from emerging powers such
as China and Brazil.
Regarding controls on capital flows in and out of emerging
economies, Lagarde said they should be used in exceptional circumstances and in
a coordinated way to stem damaging swings.
"Who will have the ability and the authority to say
(that a particular) capital control is appropriate, adequate and is the right
response to a capital surge?" she said.
"This very fine balancing point has to be decided by
someone who acts as a referee. Who can that referee be? I don't know. One of
the options is clearly the IMF which has the technical expertise to do
so."
