admin“What we need to do is collectively accept that the sudden and often abrupt movement of capital is not conducive to balance, to predictability and to stability,” said Christine Lagarde, whose country currently chairs the Group of 20 largest economies in the world.
Asian governments are dealing with huge inflows of capital from investors seeking better returns on their money than in the sluggish West.
The incoming funds have boosted the value of many Asian currencies and regional finance ministers have expressed concern because much of the money has been in the form of portfolio funds that can be withdrawn just as fast as they are injected.
“We need to identify amongst ourselves what additional steps are acceptable and should be used to try to resist the abruptness and the massiveness of flows of capital,” the minister told AFP in an interview.
“It is a matter of collective discipline really.”
She was in Vietnam to represent the G20 at annual meetings of the Asian Development Bank and speaking as its current chair.
ADB president Haruhiko Kuroda said on Tuesday that capital controls might be necessary “in some cases, in some countries, in some occasions”.
Asian governments are also confronted with soaring prices for food and oil, stoked partly by unrest in the Middle East.
Domestic food inflation in developing Asian nations hit 10 percent at the start of this year, with double-digit rises in the price of wheat, maize, sugar, edible oils, dairy products and meat.
“I am quite concerned,” Lagarde said, adding the issue could be addressed with better information about what food stocks are available, but also through better regulation of commodity derivatives. I think we need to tackle those issues in parallel so that they actually make a difference in peoples’ lives,” she said.
The G20 represents 85 percent of the global economy and includes Japan, China, South Korea, India, Indonesia and non-Asian members Britain, Canada, France, Germany, the United States, Italy, South Africa, Saudi Arabia, Argentina, Australia, Brazil, Mexico, Russia, Turkey and the European Union. — AFP.
Online Reporter