LONDON (MNI) - Bank of England Governor Mervyn King warned that global imbalances have to be addressed or the world's economic recvoery will be weak and another financial crisis could be triggered.
In remarks at a Bank of France event King said global imbalances had been one of the causes of the financial crisis and he urged the G20 to tackle them.
"Global imbalances contributed to the financial crisis and a rebalancing of global demand is the key to a sustainable recovery," King states in the text of his contribution to the event in Paris.
"If we, collectively, do not deal with these problems at best we will have a weak world recovery and at worst we will sow the seeds of the next financial crisis. It is in our hands to avoid both those outcomes," he said.
King said the world economy remains vulnerable to the risks associated with imbalances and he said talks should focus on the right speed of adjustment.
The BOE Governor was downbeat about the pace of progress so far on addressing the imbalances by advanced economies.
"What is needed now is a 'grand bargain' among the major players in the world economy. A bargain that recognises the benefits of compromise on the real path of economic adjustment in order to avoid the damaging consequences of a move towards protectionism," he said.
"A natural forum in which to strike a bargain is the G20 Framework for Strong, Sustainable and Balanced Growth. So far, the process has failed to achieve a move to a better outcome," he added.
Source: MarketNews.com
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