HELSINKI (Reuters) – The European Union wants the International Monetary Fund (IMF) to monitor foreign exchange rates more extensively but not to the point of recommending optimal currency levels. The EU position was spelled out by finance ministers and central bankers meeting in the Finnish capital ahead of the mid-September IMF meetings in Singapore. A bigger role in currency policy surveillance is one of the major strands of a revamp that IMF Managing Director Rodrigo Rato has been asked to undertake as the Fund seeks to adjust to a world where its role as a lender of last resort is waning. «In the future, we will see more surveillance and not so much credit allocation from the IMF as its main instrument, and at the meeting in Singapore we will support the IMF taking this stronger surveillance role,» German Bundesbank boss Axel Weber told a news briefing after the Helsinki meetings. IMF governors meet in Singapore on September 19-20 to discuss reform of the Washington-based agency, including extending its foreign exchange monitoring to 20 to 30 emerging economies on top of the currently covered industrialized nations. Among the countries that would come under the Fund’s currency watchdog remit is China, whose yuan currency is tightly managed and whose trade surplus with the United States is a major factor in global trade imbalances. But key European central bankers stressed the IMF analysis of foreign exchange developments should not go so far as to define appropriate rates for various currencies. «The suggestion of defining equilibrium exchange rates of various countries was rejected because, as you can imagine, it is full of complications,» ECB Governing Council member Mario Draghi told a news briefing. Portugal, Britain, France and ECB President Jean-Claude Trichet also backed that view, one official said. An increased IMF focus on foreign exchange could help the European Union shield its resurgent economic growth from financial market turbulence, EU officials said. Since its inception in 1944, the IMF has been charged with policing countries’ use or abuse of currency policies to avoid competitive devaluations and current account imbalances. The last major revision to its marching orders came in 1977. At that time, all IMF members agreed to «avoid manipulating exchange rates» to prevent balance of payments adjustments or gain an unfair competitive advantage over other countries.