A key member of the European Central Bank (ECB) has highlighted tensions in the international currency markets, raising the threat that competitive devaluations could have on the euro zone's economic recovery.
Yves Mersch, executive board member of the ECB's key monetary decision-making body, told CNBC at the Ambrosetti Workshop in Italy that the central bank's "target objective" was not the exchange rate but stressed that it was important that stronger nations were not trying to weaken their own currencies.
"Everyone should be living up to promises (on) how the international monetary system is being run and that means there should not be a competitive devaluation, there should not be beggar-thy-neighbor policies. And the areas which (are) already more on the safer side, as what concerns both growth and inflation, should not try to talk down their currency" he said.
When asked about the strength of the dollar, he said that he "very much hoped" that there is a "strong re-confirmation" of how the international monetary system is run when the Intentional Monetary Fund meet in Washington D.C. later in April.
Mersch added that when it came to the Japanese yen, the Japanese economy was experiencing weakness that was similar to the euro zone's fragile recovery.