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in one sentence: the emergence of new economicpowers will inevitably lead to the emergence of newinternational currencies. There is no escaping this fact. The transition under way could be a factor of instability.We therefore have a prime objective: improve our co-operation in order to support growth. And to do this, wewill try to get everyone to agree on the indicatorsrequired to analyse persistent imbalances. Beforetackling the imbalances, France will try to get everyoneto agree on the definition of the indicators required tomeasure these imbalances. It is fascinating! Everyonecriticises their imbalances, but there are no rules, nocriteria to define what an imbalance is or what asurplus is. So this will be our first, and extremely important, job. Ihope that, with the ministers and governors, we willstart finding answers in February. Each country willthen be asked to present economic policy actions andstructural reforms to reduce these imbalances.We also need to answer some very difficult questions.How can we reduce the need to accumulate reserves?Obviously, when countries see their capital drain awayin the space of a few days, they try to guard against thisrisk by considerably raising their reserves on the basisthat: "If there is a problem, I will have reserves." Yet this accumulation of unproductive reserves weighsextremely heavily. It is an expensive strategy. We needto make more headway with creating new IMFfacilities, as the IMF has also tried to do. But how can we improve the way we handle the systemic nature of certain crises that affect an entire region andcall not for a national response, but a global,multilateral response?HOW CAN INTERNATIONAL CAPITALFLOWS BE BETTER REGULATED? The current framework is outdated. The multitude ofrecent unilateral measures raises the question of theestablishment of multilateral rules. We will proposethat the G20 draw up a code of conduct for themanagement of capital flows. Ultimately, Francebelieves that a reform of the IMF's Articles ofAgreement would make common rules prevail and theIMF exercise its supervision in this area. You see, weset criteria that define the imbalances, we ask the IMFto analyse these criteria, supervise the application ofthese criteria, and we try to get everyone to complywith these criteria.Lastly, how do we make the transition to theinternationalisation of the new currencies? The SDR, ifmy memory serves me correctly, was created 42 yearsago. Forty-two years after the creation of the SDR, canwe agree on when and how to extend the SDR to new020G8 MEMBER COUNTRIESPhoto: © European Union, 2011

currencies such as the yuan? I was very pleased to seein the communiqué about the discussions betweenPresident Obama and President Hu Jintao that thequestion of integrating the yuan into the SDR wasraised. It is already a huge thing to ask this question!When France first spoke about it a few months ago, itwas highly controversial.These are complex questions. I am sure we will notsolve all the problems in one presidency. Yet Francewants a debate, because this debate can no longerwait. I would like to announce, in terms oforganisation, that I have proposed to ChancellorMerkel - who has accepted - that Germany co-chairthe working group on the international monetarysystem with Mexico, who will chair the G20 in2012.The second urgent issue is the volatility ofcommodity prices. If we do nothing, we risk food riotsin the poorer countries and an extremely negativeimpact on global growth.AREAS FOR ACTIONThere are four areas for action:We want regulation of the financial commoditymarkets. Some of them have no basic rules againstmarket abuse and price manipulation. Work is underway in the United States and Europe. We needcommon rules. How can we explain that it is normalto regulate the financial market, but that we have toabstain from any rules on agricultural derivatives? Itmakes no sense.We need to improve transparency on the physicalmarkets: predictability calls for knowledge ofproduction, consumption and stock prospects. Wewill propose setting up a joint database, much likeour oil database, to prevent food crises.We need to improve our food security mechanism. Iam thinking in terms of defining a code of goodconduct to exempt food aid from export restrictionsand building emergency stocks. It really isextraordinary that the food aid funds have to buycommodities at full price! In other words, not onlydoes speculation create food riots, but the food aidorganisations, to prevent people from dying, have topay full price for the food they buy! That makes nosense and it could trigger a massive flare-up, incountries and continents where they have nothing toeat. And that is unacceptable. We need to developagricultural supplies - and I hope that all myEuropean friends are listening - develop agriculturalsupplies if we want to feed the entire worldpopulation. The agriculture ministers have animmense responsibility in the G20.Finally, I would like us to look into how to put newfinancial insurance instruments to work for poorcountries so that they can protect themselvesagainst price increases and events affecting theirharvests. I have just given Pierre Jacquet, ChiefEconomist at the French Development Agency, abrief on this point. I would also like to announce thatMr Medvedev, President of the Russian Federation,has agreed to give particular attention to thesesubjects under the French Presidency. GLOBAL GOVERNANCE A word to conclude: global governance is a vast subject.We have reformed the IMF and the World Bank andcreated the Financial Stability Board.I have spoken of our will for the IMF to take its fullplace in the supervision of global imbalances, butthere is still so much to do: the creation of a worldenvironment organisation, the cohesion of all theagricultural organisations, action by the financialinstitutions in terms of the ILO's fundamentalstandards and the creation of a permanent G20secretariat to follow up on the implementation of ourdecisions between two presidencies.I have asked UK Prime Minister David Cameron, who has agreed, to work more specifically on these subjects.You see, this shows we are a co-operative Frenchpresidency. We have a consensus on the agenda. Wedo not have a consensus on the solutions, that is for forcertain, but we have made a lot of progress on theworking method and the agenda. Now we need tomake progress on the solutions. nThese remarks by Nicolas Sarkozy, President of theFrench Republic, are excerpted from the President'saddress at the Press Conference to present the Frenchpresidency of the G20 and G8 at the Elysée Palace on24 January 2011.For more information on the French Presidency of theG8 and G20 visit www.g20-g8.com.THE 37TH G8 SUMMIT On 1 January 2011 France assumed the 2011 G8Presidency and will host this year's G8 summit onMay 26-27 in Deauville, Normandy. The members of the Group of Eight (G8) are theworld's major advanced economies: Canada, France,Germany, Italy, Japan, Russia, the United Kingdomand the United States. The European Union leaders:President of the European Council and President ofthe European Commission also participate in the G8summits, however the EU does not host summits. G8 MEMBER COUNTRIES021