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Monday, 15 July 2013 10:23

G20 needs clear, predictable policies - Russia

Written by Lidia Kelly, Reuters

The Group of 20 backs clear monetary policies, Russia said on Thursday, reflecting the concerns of developing economies that a withdrawal of US monetary stimulus could cause market turmoil and capital flight. Moscow hosts finance ministers and central bankers from the world's top developed and developing markets next week amid nervousness over when Washington will wind down its programme of so-called quantitative easing.

"I think everyone will be against any sudden changes in currency exchange rates and monetary policies," Finance Minister Anton Siluanov told Reuters in an interview.

Any tightening of monetary policy, such as the withdrawal of quantitative easing, "should be done in a predictable and consistent matter," he added.

"We (the G20) should not create reasons for instability," Siluanov said. "The policy of countries issuing reserve currencies should be predictable."

Russia, the first big emerging economy to take the annual presidency of the G20, and other developing nations have grown anxious after Chairman Ben Bernanke first said in May the U.S. Federal Reserve may scale back its massive asset purchases.  In more dovish comments on Wednesday that are likely to ease those concerns going into the Moscow talks, Bernanke said a highly accommodative policy would be needed for the foreseeable future.

"If the policy of quantitative easing in the United States is terminated, this can lead to excessive nervousness on the markets, especially in emerging markets; it can lead to an outflow of capital from these markets," said Siluanov.

Siluanov welcomed the latest comments by Bernanke, who will not attend the Moscow talks, and said they had been well received by financial markets. The Fed is spending $85 billion a month to buy bonds as it seeks to ease the cost of credit.

"It is too early to be talking now about the end of the quantitative easing when the global economy is still in a recession trend," said Siluanov, 50, who took over from Alexei Kudrin in 2011.

The meeting's main task next week will be to prepare the agenda for a G20 leaders' summit in St Petersburg on September 5-6.

DEALING WITH THE DOLLAR

The BRICS - Brazil, Russia, India, China and South Africa - will meet in Moscow to discuss preventive measures needed to stabilise their balance of payments in the event that a "taper" of the Fed's stimulus causes sharp capital flight.

There has been increased talk in recent weeks among the emerging markets caucus on devising a coordinated policy to limit the negative effects that a stronger U.S. dollar could have on their commodity-driven economies.

The BRICS plan to set up a reserve pool of up to $240 billion and a development bank by their next summit in 2014. "We are working to enable closer cooperation in many aspects, including possible swap transactions," said Siluanov, playing down expectations of rapid progress, however. "The process continues, but not fast, because there are questions from the central banks as it will be the central banks implementing the policy, providing liquidity. We still have to work on that issue."

In March, Brazil and China agreed to set up a currency swap line that allowed them to trade the equivalent of up to $30 billion per year in their own currencies. The swap is meant to help businesses weather currency volatility.

DIRECTION OF TRAVEL

The G20 has not been able so far to agree on binding targets to reduce borrowing to follow on from a deal struck in Toronto in 2010, reflecting concern that too much austerity in heavily indebted economies could choke off economic recovery.

"At the level of finance ministers, we will probably agree that the debt levels of highly indebted countries will not grow in the medium term - in the next three to six years," Siluanov said.

Russia, which has the lowest sovereign debts in relation to the size of its economy of any country in the G20, will insist that countries need to show commitment to weaning themselves off debt.

"We are talking about the fact that countries with high debt should firstly not increase the level of debt to GDP, and secondly to adopt plans to reduce the debt," Siluanov said. "In my opinion, such plans need to be more specific."

When asked about concrete goals, Siluanov said that "ideally" the level would be 60 percent ratio for countries with developed economies but it should be lower for emerging markets.

This article was originally published on the website of Reuters, via the South African Foreign Policy Initiative.

Moscow:  The Group of 20 backs clear monetary policies, Russia said on Thursday, reflecting the concerns of developing economies that a withdrawal of US monetary stimulus could cause market turmoil and capital flight. Moscow hosts finance ministers and central bankers from the world's top developed and developing markets next week amid nervousness over when Washington will wind down its programme of so-called quantitative easing. "I think everyone will be against any sudden changes in currency exchange rates and monetary policies," Finance Minister Anton Siluanov told Reuters in an interview.

Any tightening of monetary policy, such as the withdrawal of quantitative easing, "should be done in a predictable and consistent matter," he added.

"We (the G20) should not create reasons for instability," Siluanov said. "The policy of countries issuing reserve currencies should be predictable."

Russia, the first big emerging economy to take the annual presidency of the G20, and other developing nations have grown anxious after Chairman Ben Bernanke first said in May the U.S. Federal Reserve may scale back its massive asset purchases.  In more dovish comments on Wednesday that are likely to ease those concerns going into the Moscow talks, Bernanke said a highly accommodative policy would be needed for the foreseeable future.

"If the policy of quantitative easing in the United States is terminated, this can lead to excessive nervousness on the markets, especially in emerging markets; it can lead to an outflow of capital from these markets," said Siluanov.

Siluanov welcomed the latest comments by Bernanke, who will not attend the Moscow talks, and said they had been well received by financial markets. The Fed is spending $85 billion a month to buy bonds as it seeks to ease the cost of credit.

"It is too early to be talking now about the end of the quantitative easing when the global economy is still in a recession trend," said Siluanov, 50, who took over from Alexei Kudrin in 2011.

The meeting's main task next week will be to prepare the agenda for a G20 leaders' summit in St Petersburg on September 5-6.

DEALING WITH THE DOLLAR

The BRICS - Brazil, Russia, India, China and South Africa - will meet in Moscow to discuss preventive measures needed to stabilise their balance of payments in the event that a "taper" of the Fed's stimulus causes sharp capital flight.

There has been increased talk in recent weeks among the emerging markets caucus on devising a coordinated policy to limit the negative effects that a stronger U.S. dollar could have on their commodity-driven economies.

The BRICS plan to set up a reserve pool of up to $240 billion and a development bank by their next summit in 2014. "We are working to enable closer cooperation in many aspects, including possible swap transactions," said Siluanov, playing down expectations of rapid progress, however. "The process continues, but not fast, because there are questions from the central banks as it will be the central banks implementing the policy, providing liquidity. We still have to work on that issue."

In March, Brazil and China agreed to set up a currency swap line that allowed them to trade the equivalent of up to $30 billion per year in their own currencies. The swap is meant to help businesses weather currency volatility.

DIRECTION OF TRAVEL

The G20 has not been able so far to agree on binding targets to reduce borrowing to follow on from a deal struck in Toronto in 2010, reflecting concern that too much austerity in heavily indebted economies could choke off economic recovery.

"At the level of finance ministers, we will probably agree that the debt levels of highly indebted countries will not grow in the medium term - in the next three to six years," Siluanov said.

Russia, which has the lowest sovereign debts in relation to the size of its economy of any country in the G20, will insist that countries need to show commitment to weaning themselves off debt.

"We are talking about the fact that countries with high debt should firstly not increase the level of debt to GDP, and secondly to adopt plans to reduce the debt," Siluanov said. "In my opinion, such plans need to be more specific."

When asked about concrete goals, Siluanov said that "ideally" the level would be 60 percent ratio for countries with developed economies but it should be lower for emerging markets.

Abstract:  Some $200 billion of new capital went to private equity and venture capital management partnerships (collectively referred to here as PE) throughout the world in 2012. For the first time, 20% of that total, some $40 billion, went to fund managers in emerging market countries. Surprisingly, of that $40 billion, only $15 billion went to the subset of emerging economies known as the BRICs (Brazil, Russia, India and China). That leaves $25 billion that went into the non-BRIC emerging markets.

So where did the rest of it go? Countries like Columbia, Chile, Peru and Mexico have seen remarkable growth. Several African countries, such as South Africa, Kenya and Nigeria — indeed, the whole of sub-Saharan Africa — have witnessed growth in the number of fund managers and the capital under management. Turkey also has emerged as a destination, as have Malaysia, Thailand, Vietnam and now Indonesia. These new players still have work to do in improving their PE ecosystems. Management capacity building is high on the list, as are appropriate laws and regulations, tax treatment and acceptance of contractual provisions. These countries’ governments have recognized the role of PE in their industries and are motivated to make the needed changes. There is a discernible transfer of knowledge from mature economies to the emerged and emerging market PE players.

These trends are reflected in two of the articles included in this year’s Wharton Private Equity Review. One offers coverage of a panel discussion titled, “Private Equity Survival Guide: How to Survive and Thrive in Emerging Markets,” which took place at the 2013 Wharton Private Equity & Venture Capital Conference. The second, written by a team of five Wharton MBA students, focuses on the impact of the Arab Spring on private equity in the Middle East and North Africa (MENA) region.  [Read more]

- See more at: http://www.safpi.org/news/article/2013/g20-needs-clear-predictable-policies-russia#sthash.vj9LEw4C.dpuf

Moscow:  The Group of 20 backs clear monetary policies, Russia said on Thursday, reflecting the concerns of developing economies that a withdrawal of US monetary stimulus could cause market turmoil and capital flight. Moscow hosts finance ministers and central bankers from the world's top developed and developing markets next week amid nervousness over when Washington will wind down its programme of so-called quantitative easing. "I think everyone will be against any sudden changes in currency exchange rates and monetary policies," Finance Minister Anton Siluanov told Reuters in an interview.

Any tightening of monetary policy, such as the withdrawal of quantitative easing, "should be done in a predictable and consistent matter," he added.

"We (the G20) should not create reasons for instability," Siluanov said. "The policy of countries issuing reserve currencies should be predictable."

Russia, the first big emerging economy to take the annual presidency of the G20, and other developing nations have grown anxious after Chairman Ben Bernanke first said in May the U.S. Federal Reserve may scale back its massive asset purchases.  In more dovish comments on Wednesday that are likely to ease those concerns going into the Moscow talks, Bernanke said a highly accommodative policy would be needed for the foreseeable future.

"If the policy of quantitative easing in the United States is terminated, this can lead to excessive nervousness on the markets, especially in emerging markets; it can lead to an outflow of capital from these markets," said Siluanov.

Siluanov welcomed the latest comments by Bernanke, who will not attend the Moscow talks, and said they had been well received by financial markets. The Fed is spending $85 billion a month to buy bonds as it seeks to ease the cost of credit.

"It is too early to be talking now about the end of the quantitative easing when the global economy is still in a recession trend," said Siluanov, 50, who took over from Alexei Kudrin in 2011.

The meeting's main task next week will be to prepare the agenda for a G20 leaders' summit in St Petersburg on September 5-6.

DEALING WITH THE DOLLAR

The BRICS - Brazil, Russia, India, China and South Africa - will meet in Moscow to discuss preventive measures needed to stabilise their balance of payments in the event that a "taper" of the Fed's stimulus causes sharp capital flight.

There has been increased talk in recent weeks among the emerging markets caucus on devising a coordinated policy to limit the negative effects that a stronger U.S. dollar could have on their commodity-driven economies.

The BRICS plan to set up a reserve pool of up to $240 billion and a development bank by their next summit in 2014. "We are working to enable closer cooperation in many aspects, including possible swap transactions," said Siluanov, playing down expectations of rapid progress, however. "The process continues, but not fast, because there are questions from the central banks as it will be the central banks implementing the policy, providing liquidity. We still have to work on that issue."

In March, Brazil and China agreed to set up a currency swap line that allowed them to trade the equivalent of up to $30 billion per year in their own currencies. The swap is meant to help businesses weather currency volatility.

DIRECTION OF TRAVEL

The G20 has not been able so far to agree on binding targets to reduce borrowing to follow on from a deal struck in Toronto in 2010, reflecting concern that too much austerity in heavily indebted economies could choke off economic recovery.

"At the level of finance ministers, we will probably agree that the debt levels of highly indebted countries will not grow in the medium term - in the next three to six years," Siluanov said.

Russia, which has the lowest sovereign debts in relation to the size of its economy of any country in the G20, will insist that countries need to show commitment to weaning themselves off debt.

"We are talking about the fact that countries with high debt should firstly not increase the level of debt to GDP, and secondly to adopt plans to reduce the debt," Siluanov said. "In my opinion, such plans need to be more specific."

When asked about concrete goals, Siluanov said that "ideally" the level would be 60 percent ratio for countries with developed economies but it should be lower for emerging markets.

Abstract:  Some $200 billion of new capital went to private equity and venture capital management partnerships (collectively referred to here as PE) throughout the world in 2012. For the first time, 20% of that total, some $40 billion, went to fund managers in emerging market countries. Surprisingly, of that $40 billion, only $15 billion went to the subset of emerging economies known as the BRICs (Brazil, Russia, India and China). That leaves $25 billion that went into the non-BRIC emerging markets.

So where did the rest of it go? Countries like Columbia, Chile, Peru and Mexico have seen remarkable growth. Several African countries, such as South Africa, Kenya and Nigeria — indeed, the whole of sub-Saharan Africa — have witnessed growth in the number of fund managers and the capital under management. Turkey also has emerged as a destination, as have Malaysia, Thailand, Vietnam and now Indonesia. These new players still have work to do in improving their PE ecosystems. Management capacity building is high on the list, as are appropriate laws and regulations, tax treatment and acceptance of contractual provisions. These countries’ governments have recognized the role of PE in their industries and are motivated to make the needed changes. There is a discernible transfer of knowledge from mature economies to the emerged and emerging market PE players.

These trends are reflected in two of the articles included in this year’s Wharton Private Equity Review. One offers coverage of a panel discussion titled, “Private Equity Survival Guide: How to Survive and Thrive in Emerging Markets,” which took place at the 2013 Wharton Private Equity & Venture Capital Conference. The second, written by a team of five Wharton MBA students, focuses on the impact of the Arab Spring on private equity in the Middle East and North Africa (MENA) region.  [Read more]

- See more at: http://www.safpi.org/news/article/2013/g20-needs-clear-predictable-policies-russia#sthash.vj9LEw4C.dpuf
G20 needs clear, predictable policies - Russia
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