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Crisis shows need to right imbalances

The financial crisis has spotlighted the importance of dealing with global imbalances in trade and capital flows, Federal Reserve Chairman Ben Bernanke said on Sunday at a Fed conference on Asia.

“The crisis has ... highlighted the need for many policy reforms that range from improving financial regulation to addressing global imbalances,” he said in brief introductory remarks.

US officials have sought to pressure China, which has a massive trade surplus with the United States, to allow the value of its yuan currency to appreciate against the dollar and to foster greater domestic demand in its economy.

That campaign has become more muted during the crisis because of China's importance as a holder of US government and mortgage agency debt and as an engine of growth in the world economy.

Bernanke did not mention China specifically in his speech.

“The global financial crisis and the recession of the past two plus years have challenged policy makers and economists and has made us keenly aware of the linkages between America, Europe, and Asia,” he said.

San Francisco Fed President Janet Yellen, speaking to the same conference, did not comment on the outlook for monetary policy or the economy in brief remarks. (Reuters)