Sir Mervyn King has insisted money printing by central banks should not be considered provocative shots in a global "currency war" and that each country should focus on doing what is necessary to restore growth.
"Domestic monetary policy should be conducted for domestic reasons, and if we follow this the global economy will accelerate," the Governor of the Bank of England said in Tokyo. "If a country is pursuing policies to improve the domestic economy, that could push down the currency a bit, but it would lead to increased domestic spending."
Earlier this month, G7 central bankers and political leaders released a statement pledging that they would not engage in competitive devaluations. The Japanese government, which has promised to step up its central bank's purchases of government bonds, has been widely accused of targeting a lower exchange rate in order to boost exports.
It was also revealed last week that Sir Mervyn voted for £25bn more money printing in the UK earlier this month, although the Bank kept its £375bn quantitative easing on hold. The pound has slipped by around 7 per cent against the US dollar and 7.5 per cent against the euro since the beginning of 2013. Several members of the Bank's Monetary Policy Committee have indicated that they would welcome a lower value of sterling to facilitate an economic rebalancing for the UK towards exports.
Sir Mervyn expressed frustration earlier this month when G7 officials briefed that the group's statement had been an indirect criticism for Japan for its attempted devaluation, even though the country was not named.
"I didn't expect that other so-called officials would be out there giving unattributable briefings both before and after the statement, trying to claim that the statement said what it didn't say," he told the February Inflation Report press conference.
Giving evidence to the Treasury Select Committee, Paul Tucker, a deputy governor of the Bank, said that the UK should not withdraw monetary stimulus until the economy has achieved "escape velocity", echoing a phrase used by Mark Carney, the head of the Bank of Canada who will replace Sir Mervyn in July.