Washington, April 20 (IANS) Risks to global financial stability have greatly increased from the accommodative monetary policies of central banks in the major advanced economies, union Finance Minister Arun Jaitley has said.
“Uncertainty continues about the smooth exit from the unconventional monetary policies (UMPs) by central banks in the major advanced economies,” he said here at a meeting of BRICS finance ministers and central bank governors.
“As a consequence, global financial stability risks have exacerbated in the wake of prolonged period of low interest rates,” Jaitley added.
He was addressing a meeting, ahead of the 7th BRICS (Brazil, Russia, India, China, South Africa) Summit in Russia in July, to take stock of the preparations for operationalising the $100 billion BRICS New Development Bank.
At the time of the Reserve Bank of India’s earlier monetary policy review in February, Deputy Governor Urjit Patel had elaborated on the “important backdrop” of UMPs to the RBI’s move to keep key interest rates unchanged.
“We are in the midst of the age of competitive depreciation and of a beggar-my-neighbour philosophy. It brings to mind an old African saying that when elephants fight the grass suffers,” Patel said at the press conference to announce the policy review, on the trend of accommodative monetary policies being adopted by developed economies.
“While the European Central Bank (ECB) and the Bank of Japan (BoJ) are printing money and devaluing their currencies on one hand, the US economy is reviving on the other. Anyone in the middle is getting crushed,” he added.
The BRICS New Development Bank is set to be headquartered in Shanghai and India will appoint its first president.
“As regards the president of the Bank, we are in the final stages of nominating the candidate,” Jaitley told the BRICS finance ministers and governors meeting here.