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Instant View: France's Sarkozy lays out G20 goals

President Nicolas Sarkozy spoke on Monday on France's presidency of the G20 economic powers during 2011, focusing on reducing volatility in currency and commodity markets and improving economic governance.
/ Source: Reuters

President Nicolas Sarkozy spoke on Monday on France's presidency of the G20 economic powers during 2011, focusing on reducing volatility in currency and commodity markets and improving economic governance.

ECONOMISTS' AND ANALYSTS' COMMENTS:

JEAN-LOUIS MOURIER, ECONOMIST WITH AUREL BGC:

"It's not extremely original. All these themes were already brought together in a speech not long ago."

"The only new thing is the setting up of a working group on the reform of the international monetary system which is to be co-chaired by Germany and Mexico. To begin with he wanted China to be heavily involved, I don't know if China refused or if the others were reticent."

"This (universal welfare protection idea) is newer, it's undoubtedly very complicated, not necessarily a bad idea but not easy to implement at an international level. This addresses fears in developed countries about 'social dumping' by the big emerging economies. Raise the issue, yes why not, but I'm not sure he will manage to get China to give much ground on that."

"What can be noted is that the tone is relatively accommodating. Most of the big ideas that have been outlined over the past two years and now there's a much more market-friendly tone than at the beginning of the crisis, which is much more favorable to market mechanisms. The idea is to regulate without breaking the mechanisms."

MARC TOUATI, DIRECTOR, ASSYA COMPAGNIE FINANCIERE:

"There are two important points, one positive, one negative. The positive thing is that he did confirm that he didn't want to call into question the dollar as the benchmark of the international monetary system. I think that's important because the dollar is going to keep its role as the reference in international currency markets, and that will avert a new surge in the euro.

"It's an important point for Europe and for global stability because if ever the dollar no longer had this role in the future we would risk having a dramatic world crisis.

"There is a second more negative point, it's his idea about a tax on financial transactions -- it's a stock response that we've been hearing for years, we know very well that it's not feasible, it's the desire to get people's attention but underneath there's nothing really concrete."

JEREMY CHARLESWORTH, CHIEF INVESTMENT OFFICER, MOONRAKER FUND MANAGEMENT, A COMMODITY FUND OF HEDGE FUNDS:

"Every time commodities go up, the politicians will get excited, there'll be jawboning, commodity prices will come down, it will all go quiet and then when it goes up again, it's all (blamed on) the speculators."

"Commodity markets were never originally designed for speculation. They are ideally suited for farmers and mining companies to hedge their future production and I am marginally in favor of some regulation to stop speculators screwing things up.

"If a big bank puts on a large position, no one else has got a chance. It's not a level playing field. If a little "Mom and Pop" farmer in Kansas wants to hedge their red wheat for next year, by the time they leave their farm and go downtown to the bank in town to speak to them about putting on the hedge the global bank has come in and pushed the price up. It doesn't seem quite fair. I do think some sort of position limit (is reasonable), but I don't know how you'd manage it."

"Food prices have gone up because of supply and demand fundamentals but speculators have added to the price rise by joining the party. We've got some big problems with floods in Australia, cold weather in North America, droughts here and there - all this causes price rises."

ALEX HEATH, RBC CAPITAL ANALYST

"The view is (on commodity market regulation), is it right that you can stockpile and hoard away vital resources when you don't actually want to consume them? The other argument is it's a free market."

"At the moment there seems to be no clear consensus on this, so I would expect more politicians to come out and make comments on this."

EUGEN WEINBERG, COMMODITY ANALYST AT COMMERZBANK

"Given high prices and the high scale of unrest right now concerning food prices, it makes sense to talk about transparency and probably even more regulation of these markets to at least counter risks.

"Regarding visibility, we consider more transparency on who is trading and how much is being traded on the markets would be the first task.

"The second task if you come to the conclusion that the markets are overly exposed to speculative forces, then probably more regulation in this case. But I don't think that tackling speculation would bring the effects needed.

"In the U.S., the CFTC commission has been doing this for years. There, to some extent we know who is trading, this information is being disseminated on a weekly basis. Something according to the way the CFTC commission is doing this might be done also without much new regulation in Europe. Then you can still decide what might be introduced, whether the positions limits might be discussed, price ranges might be discussed, but at the moment visibility is the highest priority."