UPDATE 1-W.Bank chief says no gold standard, but its role key

Wed Nov 10, 2010 4:04am GMT

* Says global policymakers need to acknowledge role of gold

* Does not believe world can return to fixed FX system (Adds details)

By Kevin Lim and Nopporn Wong-Anan

SINGAPORE, Nov 10 (Reuters) - World Bank President Robert Zoellick said on Wednesday he was not advocating a return to a gold standard for exchange rates, but described the metal as "the elephant in the room" that policymakers needed to acknowledge.

Zoellick, who was attending an infrastructure conference organised by the World Bank and the Singapore government, said it was important for nations to look beyond exchange rates and focus on economic fundamentals.

"I don't believe you can return to a fixed exchange rate system and that is the gold standard," he later told the Foreign Correspondents Association."

"Markets are already using gold as an alternative monetary asset because confidence is low...it is saying we have a problem that needs to be fixed."

Gold prices have soared to record levels in recent weeks and are currently around $1,400 per ounce.

"There is an elephant in the room and that is what I want people to recognise," Zoellick said.   Continued...

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UK £ USD =1.2617
Euro USD =1.1124
Rand USD =0.0764