Today marks the first day of G-20 meeting in Sydney to discuss monetary policy, specifically tapering by the Federal Reserve. In days leading up to the meeting the Fed has faced substantial criticism by emerging markets, like India, that have claimed that as the Fed eases buying bonds emerging market currencies and stocks have lost value.
In a press conference in Tokyo yesterday Japanese Finance Minister Taro Aso discussed some of the issues emerging markets face,
“For emerging nations, they have faced weaker currencies, and sudden capital outflows due to their short-term funding,” said today at a press conference in Tokyo. “It is important that emerging nations make efforts themselves to fix these issues” like high inflation and current account deficits, he said.
The meeting in Sydney will look at solutions to the problems emerging markets face in regard to Fed policy. In addition to a call for emerging markets to better insulate themselves from the U.S. monetary policy the meeting will also analyze increasing communication between central banks so policies between countries can be coordinated to improve their effectiveness. Still there is disagreement as to the extent of the the tapering’s responsibility for the turmoil in emerging markets with the World Bank claiming that the timing may be more coincidental than causal.
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