Wow this guy sure sounds like an appolgist for the FED and the US.

OTTAWA — Bank of Canada Governor Mark Carney warned on Friday that failure to implement promised G20 reforms could jeopardize the global economic recovery and, in turn, worsen the outlook for Canada.

In a speech highly critical of global leaders’ track record in coordinating policies, Carney blasted proposals to replace the U.S. dollar as the world’s reserve currency.

He said governments should restore their faith in the current international monetary system by making adjustments, including a commitment to more flexible exchange rates in countries like China.

"The current functioning of the international monetary and financial systems is beginning to force a wrenching real adjustment across major economies," Carney said in the prepared text of a speech he was to deliver in Calgary, Alberta.

"Renewed weakness in the United States could have important implications for the Canadian outlook."

The Bank of Canada raised its benchmark interest rate on Wednesday for the third time this year, bringing the rate to what it said was an "exceptionally stimulative" 1 percent.

It said the recovery would be slightly more gradual than it had earlier predicted as the sputtering U.S. economy hits Canadian exports.

SDRS OR DOLLARS

France aims to use its G20 presidency next year to discuss Chinese proposals to use the International Monetary Fund’s Special Drawing Rights more widely as a reserve currency.

But Carney said there is no viable short-term alternative to the U.S. dollar as the world’s reserve currency, and he urged G20 members to keep up the momentum on more mundane reforms rather than trying to reform the system too radically.

"There is no miracle cure," Carney said. "Faith is required, but not in a barbarous relic or a utopian global central bank. Rather, countries must restore their faith in the adjustment process under the current system."

He said G20 discussions will inevitably include debate of China’s controls on its yuan currency, widely seen as giving Chinese exports an unfair advantage.

China said on June 19 it would return to a gradual appreciation of the yuan against the dollar, a move the G20 widely applauded. Beijing has allowed the currency to appreciate against the U.S. currency by 1 percent since then, and some doubt if the change will be fast enough.

Carney said failure by countries like China to ease exchange rate controls sufficiently is leading to deflationary pressures in advanced economies.

He said countries with relatively fixed exchange rates were inappropriately behaving as though they needed a similar monetary policy to that of the U.S. Federal Reserve, where inflation is much lower.

"If this divergence in optimal monetary policy stance persists, the existing strains on the system will grow."