The following are highlights of comments by finance ministers and central bankers in Washington this week for meetings of the Group of 20, the semiannual meetings of the International Monetary Fund and World Bank, and the annual meeting of the Institute of International Finance.

EUROPEAN CENTRAL BANK EXECUTIVE BOARD MEMBER LORENZO BINI

SMAGHI:

ON PRIVATE SECTOR INVOLVEMENT

It created reserve moral hazard because it created the illusion in some countries, particularly in Greece, that there is an easy way out.

We have had three spikes in spreads in the last 12 months .. The last one was on July 21 when heads of government agreed on haircuts for the private sector...It was, against the advice of the ECB, a total mistake in the way in which governments and parliaments have addressed the issue of dealing with the markets.

'There is no way out of this crisis unless they agree on the concept...We need to ensure that the contagion and the fear that markets have of investing in Europe is dealt with.

ON PRIVATISATIONS

'European sovereigns should make it clear that in order to honor their signatures they are willing to sell their assets, to privatize, because the signature of the state is the most important element.

Secondly we need to ensure there is enough backstop to ensure the financial sector can resist any shock.

ON ECB

We have to ensure that the liquidity in the markets is there and this requires actions both by the states, because the fiscal part is a state responsibility, first implementing the EFSF and second making sure the EFSF is used in the most efficient way as a backstop for the financial sector, and by central banks, which have the obligation to ensure liquidity in the market. There we have policies which ensure unlimited refinancing by European banks .. and as Trichet says the amount of collateral is huge, it is some 3 trillion euros.

We need to act quickly in the coming days to convince the market that investing in the euro is a very good investment.

INTERNATIONAL MONETARY FUND'S EUROPEAN DEPARTMENT CHIEF

ANTONIO BORGES

'It is very important that we see a combination of the ECB and the EFSF. Anyone who thinks that the EFSF will be a miraculous solution to the problem I think is making a very big mistake.

'The ECB is the only agent which can really scare the markets.'

KLAUS REGLING, HEAD OF EUROPEAN FINANCIAL STABILITY

FACILITY

ON EUROBONDS

This, under the best of circumstances, this will take a decade, maybe two. It would require substantial treaty changes. I don't think the public is ready for it in most cases. It would mean on the German budget that decisions could be taken in Brussels against the vote of Germany; the German public is not ready for that, and the same is true in other countries so we have to work with the system we have.

EFSF

We are very close to implementing the decision of July 21 fully. The EFSF will almost double in fire power and there are ideas about how to leverage it even further. There will be new instruments that the EFSF can use. All that will be important in the short term to do crisis management.

ECB GOVERNING COUNCIL MEMBER EWALD NOWOTNY

ON ECB

The ECB has a mandate to provide unlimited liquidity to banks, it has no mandate to lend to insolvent banks.

ON THE EURO ZONE CRISIS:

Crisis starts with crisis of financial sector this then translates into crisis of the real economy... This then translates into a crisis of the public finances. The challenge is does this lead to a feedback to another crisis of the financial sector.

Strongly want to emphasize, first implement decisions made of July 21. It is not helpful that we have an avalanche of new proposals every week.

I am very much in favor of a more federalist approach in euro, but we have to be realistic, this requires treaty changes.

The ECB and the central banks have to take the rules we have set ourselves seriously. It is an issue of credibility.

Everybody needs a certain transfer union but I think there are public limits to the level of the transfer.

One has to think carefully about the easy proposals that would increase the transfer union... Nothing can substitute for fiscal discipline

Germany G20 International Monetary Fund