6 Sep 2013
Flash: Takeaways from the G20 summit – Deutsche Bank
FXstreet.com (Lisbon) - The spill-over risks into EM from an unwinding of Developed market stimulus was a dominant theme at the two-day G20 summit that started yesterday, notes Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank.
Key quotes
“Chinese officials said that they hope that as the issuing country of the largest reserve currency in the world the United States should be mindful of the spillover effects of its macroeconomic policies”.
“South Korea also weighed in by saying that if a reserve currency country changes its monetary policy stance, it should consider not only its domestic economic conditions but the effects on the global economy – India’s President also asked for the need for an orderly exit from the unconventional monetary policies being pursued by the developed world for the last few years.”
“There are also reports that EM countries will create an $100bn pool of currency reserves to safeguard against potential financial shocks. According to a statement issued at the G20 summit, China will contribute $41bn to the pool while Russia, India, and Brazil will contribute $18bn each. South Africa will also add $5bn. DM central banks are treading across unchartered waters here as far as monetary policy is concerned and the unwinding of the unprecedented amount of cheap liquidity was never going to be straightforward.”
Key quotes
“Chinese officials said that they hope that as the issuing country of the largest reserve currency in the world the United States should be mindful of the spillover effects of its macroeconomic policies”.
“South Korea also weighed in by saying that if a reserve currency country changes its monetary policy stance, it should consider not only its domestic economic conditions but the effects on the global economy – India’s President also asked for the need for an orderly exit from the unconventional monetary policies being pursued by the developed world for the last few years.”
“There are also reports that EM countries will create an $100bn pool of currency reserves to safeguard against potential financial shocks. According to a statement issued at the G20 summit, China will contribute $41bn to the pool while Russia, India, and Brazil will contribute $18bn each. South Africa will also add $5bn. DM central banks are treading across unchartered waters here as far as monetary policy is concerned and the unwinding of the unprecedented amount of cheap liquidity was never going to be straightforward.”