01.11.201301:31:00UTC+00IMF Urges Germany To Be Mindful Of Global Interests

The International Monetary Fund has urged Germany to keep in mind the interests of the international community while addressing Europe's policy challenges.

"While Germany and its European partners may have an understandable tendency to focus on this transition, there is much else going on in the world that will profoundly affect you and your economic interests," IMF's First Deputy Managing Director David Lipton said during a speech in Berlin on Thursday.

He warned that Germany would face grave risks in the event that global interconnectedness is mismanaged. "My appeal to you tonight is that as Germany carries on the work of the European project, it should lift its sights to the global horizon as well," Lipton said.

"Europe is emerging from its deep recession, but only just," the official said. "Japan is looking up, but still has a ways to go" while the U.S. is "recovering steadily", he said.

He said that soon, the U.S. will need to begin to normalize financial conditions. While normalization of conventional monetary policy after a more typical recession might take a year or two, normalization of unconventional policy after this deep recession is expected by markets to take many years, the official pointed out.

Lipton said the IMF has suggested that as exit from unconventional policies evolves, the U.S. authorities have a special obligation to communicate their intentions clearly, to act in an orderly fashion, in dialogue with other central banks.

Referring to the policy transition in Japan, he said though Japan will manage its policy reforms, the authorities should also remain cognizant of their international obligations and the spillovers their policies may cause.