The head of the International Monetary Fund (IMF) Christine Lagarde strongly dismissed concerns over a so-called currency war on the sidelines of the Group of 20 nations (G-20) meeting of finance ministers and central bankers in Moscow.
"There's been lots of talk of currency wars, and we have not seen any such thing as a currency war. We've heard currency worries, not currency wars," said Lagarde. "We've not seen confrontation but deliberation, dialogue, discussions and clearly this G-20 meeting has been extremely helpful and productive."
Lagarde's comments echoed those of the G-20 nations on Saturday, who declared that there would be no currency war. This has taken the heat off Japan, which has been criticized for its expansive policies that have driven down the yen following the election of Prime Minister Shinzo Abe.
(Read More: G-20 Defuses 'Currency War,' Japan Off the Hook)
While agreeing not to enter into any competitive devaluation of their currencies, the G-20 expressed concerns over fiscal imbalances in major economies and Lagarde responded to these worries by calling for specific medium term goals to be set in both the U.S. and Japan. These goals are necessary to eliminate the dangers associated with uncertainty, she said acknowledging political divisions could prove a barrier to fixing long-term fiscal plans.
"There is a clear understanding on the part of the U.S. and Japanese authorities that the fiscal agenda is critical," she said.
"What I mean by 'fiscal agenda' is a medium term goal, which has to be identified, and also supported broadly in those countries. It has to be specific and detailed enough to eliminate as much as possible the uncertainty that goes with a lack of agenda," she added.
The U.S. government avoided the much anticipated "fiscal cliff " - a combination of tax hikes and spending cuts - by passing the American Taxpayer Relief Act of 2012. However, the government still faces the long-term challenge of managing its $16 trillion deficit, amid strong political divisions, while attempting to return to economic growth.
Meanwhile Japan's government is also burdened with trying to cut its $77 billion trade deficit while simultaneously trying to drag its economy out of a decade long period of weak economic growth and political gridlock.
(Read More: Japan Finance Minister Relieved G-20 Heat Is Off)
Lagarde also warned that policies intended to reduce deficits or fiscal consolidation needed to be country specific and administered at the correct pace.
"There has to be fiscal consolidation and it has to be at the right pace and it has got to be country-specific. It often has to go hand in hand with monetary policy, and we've seen quite accommodative monetary policy in order to support and help fiscal consolidation efforts.
"They can't be a substitute for each other, they have to go in parallel, and that's what we hope to see with the missing element, which is the medium term anchoring that is needed in both countries," she added.