WASHINGTON - The United States and other industrial nations have been overpowered by the huge volume of currency trading that has ripped through European exchange markets in recent days, Treasury Secretary Nicholas Brady said yesterday.

In a speech to the annual meetings of the World Bank and the International Monetary Fund, Mr. Brady admitted that intervention by the Federal Reserve and other central banks was unable to stop the wide swings in currency rates and short-term interest rates within Europe's Exchange Rate Mechanism.

Capital markets "have grown dramatically in size and complexity," with daily transaction volume in the foreign exchange markets approaching $1 trillion, said Mr. Brady. That "is roughly double the total reserves of the major industrial countries and well beyond the resources governments can bring to bear in the markets," he added.

Mr. Brady's comments came as the exchange markets were gyrating again yesterday on heavy trading and more shifts in monetary policy by European central banks.

In Italy, which has suspended its participation in the Exchange Rate Mechanism and opted to devalue its currency, the central bank let short-term rates fall to 16% from 19%. France, which has a stronger economy and is fighting to defened the franc, took the opposite tack and raised short-term rates to 13% from 10.5%.

Both actions followed the Bank of England's move on Tuesday to cut the base lending rate to 9% from 10%. Britain is also opting out of the exchange mechanism for now and allowing the pound to drop in exchange markets as it eases monetary policy to fight a long recession.

Also yesterday, the dollar sank to an all-time low of under 120 Japanese yen. Traders said the drop in the U.S. currency came at least in part on a comment by Treasury Undersecretary David Mulford that the United States is not worried about the dollar's value against the yen.

Mr. Brady called on the Group of Ten industrial nations to study global Capital flows, "their size and movements, and their implications for the international monetary system." The group includes the United States, Belgium, Canada, France. Italy, Japan, the Netherlands, Switzerland, Britain, Germany, and Sweden.

"Recently, our economic performance has again diverged, creating new uncertainties." said Mr. Brady "We have had to seek a new consensus, this time on the priority for growth."

He repeated the U.S. appeal for lower global interest rates, a position disputed by the IMF, which has instead urged the United States and Germany to cut their budget deficits.

Mr. Brady also said President Bush's proposal to establish a commodity price index that includes gold could help the industrial countries strengthen international monetary policy coordination. The Bush plan was offered under the Reagan administration by then Treasury Secretary James Baker and has never gone anywhere.

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