WASHINGTON - The world's top finance officials wrapped up three days of talks in Washington on Sunday after failing to reach a consensus on measures to head off what some see as a looming currency war.

The International Monetary Fund steering committee, which has been struggling to address friction among key economies, including China and the United States, said on Saturday the organization should continue its efforts to manage capital flows.

"While the international monetary system has proved resilient, tensions and vulnerabilities remain as a result of widening global imbalances, continued volatile capital flows, exchange rate movements and issues related to the supply and accumulation of official reserves," the IMF panel said in a statement after its meeting on Saturday.
"We call on the fund to deepen its work in these areas, including in-depth studies to help increase the effectiveness of policies to manage capital flows."

The statement from the International Monetary and Financial Committee, the policy arm of the IMF, does not include any specific call for China or others to change their currency policies.

China's central bank governor Zhou Xiaochuan over the weekend also dismissed some foreign demands for faster yuan appreciation.

Speaking at a forum during the IMF-World Bank annual meetings in Washington, Zhou reiterated China's policy of a gradual move toward a market-determined exchange rate. "Gradualism is good for a large-sized economy. Otherwise, it may harm the economy," he said.

Tensions have been escalating recently over China's currency policy, with the US taking the lead in blaming China for holding down the value of the yuan. This, the US claims, gives an advantage to Chinese industry and is a major reason for its huge trade deficit.

Zhou said there were underlying reasons for growing foreign pressure concerning yuan appreciation. "Some major countries are still struggling with a weak economic recovery and rising unemployment. Blaming another country's currency policy helps divert public dissatisfaction.

"Such sentiments will recede as the economic recovery in the US and Europe, gains momentum," he said.

In response to growing external calls for a stronger yuan, the central bank announced in June that it would increase currency flexibility. Since then, the yuan has risen by some 2.2 percent, hitting its highest level since 1993.

Economists said it is not realistic to regard yuan appreciation as a "silver bullet".

"China should boost domestic demand and become less dependent on exports, while Western countries, such as the US, must set up comprehensive financial regulatory systems and cut their heavy reliance on borrowing to fuel consumption," said Zhao Xijun, a professor of finance at Renmin University of China.

At the end of the IMF meeting, IMF Managing Director Dominique Strauss-Kahn also said the fund will step up its focus on global systemic stability, which is an issue of paramount importance, and the IMF is the institution best placed to address it.