Treasury Secretary Donald T. Regan said yesterday that the Reagan administration will propose a study of the impact of government intervention on exchange markets at the Versailles summit next week, but declined to say that the United States intends any basic change in its intervention policy.
Regan told a group of reporters at the White House that the United States, in a gesture to other governments, intends to "soften the tone," rather than the direction, of American policy on intervention. A formal Treasury statement handed to reporters reiterated that the policy "in essence, is that the United States will only intervene, when necessary, to counter disorderly foreign exchange conditions."
The intent, Regan said, is to limit intervention to times of erratic market behavior. "But what's erratic?" Regan asked rhetorically.
Sources give the impression that Regan wishes to soften the uncompromising anti-intervention statements of Undersecretary Beryl Sprinkel. Many European governments feel that it is unwise to take a position that central banks should never intervene--that such a position encourages wild fluctuations in the markets.
Regan stressed yesterday that the United States is not following a non-intervention policy, that it had intervened once (when the assassination attempt was made on President Reagan), and that it had been prepared to do so on two or three other occasions, but didn't have to when the market righted itself. But he doesn't appear to have changed the basic Reagan administration view that private markets do the best job of establishing exchange rate relationships.
The U.S. plan apparently is to get the summit leaders next week to "bless" Regan's proposal for a study of intervention by a group of leading finance ministers, with the International Monetary Fund providing staff assistance.
"That will show," said a high level source, "that at least we are taking everybody's views into account on exchange rates. It at least sets up a process in a healthy way in trying to reduce some of the disparities in view on this subject."
Meanwhile, the Joint Economic Committee continued its examination of the principal issues to be explored at the summit with testimony that emphasized the bleak economic backdrop for the heads-of-government meeting.
On Tuesday, President Reagan's former undersecretary of state for economic affairs, Myer Rashish, predicted that the summit would achieve only minimal results because President Reagan had missed the opportunity to "come forward with a change in the U.S. economic policy mix."
Rashish, told the JEC that the president "would have served both his domestic and foreign policy interests" by moving toward a tighter fiscal policy and an easier monetary policy.
Presidential leadership along this line could have led to "a deal" at the Versailles summit that would have enabled Japan to have a made a comparable--and opposite--switch in its macroeconomic policies, Rashish said. "But as I see it, that isn't going to take place. What will take place will be much more marginal and modest," Rashish said.