Oct 9 U.S. Treasury Secretary Jack Lew on Friday underscored the need for G20 countries to abide by their commitments on exchange rate policies, the Treasury said in a statement.
Lew told Korea’s Deputy Prime Minister and Finance Minister Choi Kyung-hwan that all countries in the G20 must continue “to move toward market-determined exchange rates and not target exchange rates for competitive purposes,” the Treasury said.
The two officials were speaking on the sidelines of the International Monetary Fund and World Bank’s annual meetings in Lima, Peru.
Focusing development and traditional finance towards low carbon energy efficient infrastructure will fight climate change, help the world meet sustainability targets and boost global economic productivity, the world’s finance ministers have been told.
The transition to a more sustainable economy can only be achieved by mobilising more of the world’s capital towards climate action, according to a report published by the United Nations Environment Programme on Thursday (8 October)
But too much money was still backing high carbon and resource intensive projects. Rules and incentives in financial markets worldwide can discourage sustainable investment, UNEP warned yesterday.
The World Bank Group and International Monetary Fund (IMF) are holding its joint annual meeting in Lima. It is attended by the world’s finance ministers and central bankers.
UNEP wants changes to the design of the global financial system, including the actions of regulators, governments, and stock exchanges, to boost investment in infrastructure and slow environmental destruction.
Such investment would benefit developed, developing and emerging economies, campaigners said.
On Wednesday (7 October) the OECD said that public and private finance from industrialised countries for climate action in developing nations was building momentum. Developed countries have been promised US$100 billion per year by 2020.
Climate finance reached $62 billion in 2014, up from $52 billion in 2013 and made an average of $57 billion annually over the 2013-14 period, the OECD said.
G20 finance ministers held a meeting in Lima yesterday. Beforehand, campaigners, business groups, and leading economists said low carbon infrastructure was an essential part of the struggle to keep global warming increases below two degrees above pre-industrial levels.
World leaders will meet in Paris on 30 November for the United Nations Climate Change Conference, which aims to secure international agreement over the two degree target.
The group of 38 major business groups and NGOs from 18 countries called on the G20 to recognise the huge potential for energy efficiency public investment, for example in renovating buildings, to boost global economic productivity.
During the next 15 years, around $90 trillion is likely to be invested globally in infrastructure. Focusing that investment on low carbon, energy efficient infrastructure is essential to keep the global temperature increase below 2°C.
The G20 finance ministers will be using the Lima meeting to finalise their recommendations ahead of the G20 Heads of State meeting in Antalya, Turkey on 15 and 16 November.
The recommendations will likely have an influence on negotiations at the upcoming United Nations Climate Change Conference.
The alliance statement calls on the G20:
- To treat energy efficiency as an public infrastructure priority
- To commit to undertake an assessment of the structural reforms needed to address financing barriers and grow markets to improve energy productivity
- To commit to delivering sufficient public funding to ensure equal access to finance among householders, and to leverage the large scale private finance need to repair and enhance out building infrastructure
Ingrid Holmes, director at think tank E3G, said, “Given the multiple benefits of energy efficiency to boost economic productivity, improve health outcomes, reduce carbon emissions and cut energy bills, Governments must include energy efficiency as an infrastructure priority.”
Ada Amon, senior associate at E3G, added, “80% of global energy is consumed by G20 countries. If the G20 make energy efficiency an infrastructure priority it could make a huge dent in global energy consumption whilst boosting economic growth. No other infrastructure investment can do so much for so many.”
The call for greater investment was echoed by Lord Nicholas Stern, a globally recognised climate change and economics expert.
He stressed the need for development banks to encourage increased investment in sustainable infrastructure, especially in emerging and developing economies.
Development banks will need to increase infrastructure lending five-fold over the next decade from around $30-40 billion per year to over $200 billion, he said.
Lord Stern said, “Changing existing patterns of high-carbon infrastructure investment is a major challenge and the later it is left the more difficult it becomes. We must focus attention on the scale, quality and urgency of investments required to accelerate the low-carbon transition.”
He said the Paris conference was a chance to “enter a new period of extraordinary creativity, innovation, investment and growth.” He said there was a need to increase significantly countries’ ambitions to cut greenhouse gas emissions if we are to limit global warming to no more than 2°C.
“The Paris summit must not be regarded as a one-off opportunity to fix targets. Instead, it must be the first step of many, based on regular reviews of how close we are to meeting the goal of avoiding dangerous global warming,” he added.
In Paris, the European Union will negotiate as a bloc. EU leaders in October agreed a goal of cutting greenhouse gas emissions by at least 40% compared to 1990 levels by 2030. They also agreed to increase energy efficiency by 27%.
Negotiations on climate change began in 1992, and the UN organises an annual international climate change conference called the Conference of the Parties, or COP.
Paris is hosting the all-important 21st conference in December 2015. The participating states must reach an agreement to replace the Kyoto Protocol, the object of which was to reduce CO2 emissions between 2008 and 2012.
Reaching an agreement, whether legally binding or not, is the priority between now and December.
- 11 October: End of IMF, World Bank meeting in Lima
- 15 November: G20 Heads of State meeting in Antalya, Turkey
- 30 November: UN Climate Change Conference in Paris begins.
ANKARA marketwatch–The head of the International Monetary Fund on Saturday called for the world’s largest economies to urgently move ahead with economic overhauls as the global growth outlook sours and market turmoil rocks emerging markets.
“Downside risks to the outlook have increased, particularly for emerging market economies. Against this backdrop, policy priorities have taken on even more urgency since we last met in April,” IMF Managing Director Christine Lagarde said after a meeting of top finance officials from the Group of 20 largest economies.
The International Monetary Fund said earlier this week that it plans to downgrade its global growth outlook for the year–already at its slowest rate since the financial crisis–in part because China’s slowdown is weighing on global output more than expected.
Several of the world’s largest emerging markets are already in recession and struggling to revive growth, especially those reliant on commodity exports. Emerging market woes come as the Federal Reserve prepares to raise interest rates, possibly as soon as this month, pushing up borrowing costs around the world.
“A concerted policy effort is needed to address these challenges, including continued accommodative monetary policy in advanced economies; growth-friendly fiscal policies; and structural reforms to boost potential output and productivity,” Ms. Lagarde said.
G-20 countries last year said they would commit to trying to boost the global economy by 2 percentage points of global gross domestic product over five years by overhauling their economies. But those efforts have fallen well short of ambitions, often plagued by political challenges at home.
Growth is too low, trade is too low, investment is too low and unemployment still too high, Ms. Lagarde said, adding that “more implementation is urgently needed.”
The IMF also warned the Fed again against raising interest rates prematurely. The fund has repeatedly said the U.S. central bank should delay a rate increase until 2016, not only because the American economy isn’t ready, but also because of the global implications.
A mixed jobs report Friday complicates the Fed’s decision.
“It is better to make sure that data is absolutely confirmed, that there is no uncertainty,” Ms. Lagarde said.
bloomberg: Global finance chiefs persuaded China to join a foreign-exchange peace pact as they sought to contain the tensions unleashed by the country’s stock-market rout and its August devaluation.
Finance ministers and central bankers from the Group of 20 nations pledged Saturday to “refrain from competitive devaluations” in the final communique from their two-day meeting in Ankara. That’s the first time the G-20 has used such language since 2013.
China is on the defensive as its slowing economy and market turbulence send shock waves through emerging markets just as the U.S. is preparing to raise interest rates. With the MSCI emerging market index down 18 percent so far this year, an earlier version of the statement prepared before the meeting cited “recent volatility in financial markets” and the need to monitor potential spillovers.
The Chinese delegation’s presentation was the main focus of the two-day meeting, Spanish Economy Minister Luis de Guindos said.
“There’s been an excess of investment and an excess of indebtedness — it will take time to clean up those excesses,” Guindos told reporters. “They are heading to a new normal situation for them, which will be growth around 6 or 7 percent.”
China’s surprise decision to devalue the yuan as it tried to contain the stock market turmoil caused the currency to drop the most in 21 years last month, triggering exchange-rate declines elsewhere in the emerging world on concern that a weaker yuan will hurt countries exporting to China.
‘It Wasn’t Enough’
Zhou Xiaochuan, governor of China’s central bank, told his counterparts that his country had had to deal with the bursting of a stock market bubble as he described policy makers’ plans, according to Japanese Finance Minister Taro Aso.
“It wasn’t enough,” Aso told reporters. “They may have tried to be constructive, but they weren’t detailed enough.”
The Chinese delegation said it was trying to limit disruption as the economy shifts to a different growth model, according to an international official participating in the talks. It said it is trying to reduce indebtedness and planning measures that will regulate swings in the stock market.
The last time the G-20 issued such a firm statement against currency wars Japan was in the spotlight as its campaign of monetary stimulus pushed the yen to its lowest level against the dollar in more than three years. China allowed the yuan to drop after the Shanghai Composite index lost about 40 percent from a three-year high in June.
“China is definitely trying to play a constructive role,” Canadian Finance Minister Joe Oliver said in an interview. “It is the second-largest economy in the world and so when it slows down it has global implications. That is I think what we are dealing with.”
The Chinese delegation said the currency move wasn’t an attempt to grab exports from its international competitors and that explanation was accepted by the other nations, according to the international official.
“No one can predict exactly on the market volatility, but I’m confident that the renminbi exchange rate will be more or less stable around the equilibrium level,” Yi Gang, China’s deputy central bank governor, said in an interview as he headed into Friday’s session. “The Chinese economy’s fundamentals are fine.”
The Chinese asked for specific references to their problems to be left out of the final communique, a euro-area aide said.
U.S. Treasury Secretary Jacob J. Lew told Chinese Finance Minister Lou Jiwei in Ankara on Friday that it’s important for China to signal that it will allow market pressures to drive the yuan up as well as down. China should avoid persistent exchange-rate misalignments and refrain from competitive devaluation, Lew said, according to a Treasury statement.
China’s slowdown comes as the Federal Reserve is considering raising U.S. interest rates for the first time in nine years. Vice Chairman Stanley Fischer explained the arguments for and against an early increase in U.S. interest rates, de Guindos said.
The draft statement seen by Bloomberg News before the talks began said that in line with the improving outlook, “monetary policy tightening is more likely in some advanced economies, which may remain one of the main sources of uncertainty in financial markets.”
Some delegates from emerging markets said at the meeting that the Fed should get on with raising rates to end uncertainty, according to an official who was present.
Finance Ministers and Central Bank Governors Meeting
The Group of Twenty (G20) is the premier forum for global economic and financial cooperation that brings together the world’s major advanced and emerging economies, representing around 85% of global GDP. The G20 started in 1999 as a meeting of Finance Ministers and Central Bank Governors in the aftermath of the Asian financial crisis. In 2008, the first G20 Leaders’ Summit was held, and the group played a key role in responding to the global financial crisis. G20 leaders have met nine times since 2008, continuing to focus on achieving strong, sustainable and balanced growth, promoting job creation and financial regulations that reduce risks and prevent future financial crises and modernizing international financial architecture. The presidency of the G20 rotates annually among its members. To ensure continuity, the Presidency is supported by a “Troika” made up of the current, immediate past and future host countries. In 2015, the members of the G20 Troika are Turkey (current President), Australia (2014 President) and China (2016 President). The G20 works closely with international organizations including the Financial Stability Board, the International Labour Organization (ILO), the International Monetary Fund (IMF), the Organization for Economic Co-operation and Development (OECD), the United Nations (UN), the World Bank and the World Trade Organization. The 2015 G20 Agenda Three key objectives of the 2015 G20 agenda for the global economy will be: 1-Strengthening the Global Recovery and Lifting Potential 2-Enhancing Resilience 3-Buttressing Sustainability In 2015, Turkey will attach utmost importance to strong cooperation and effective coordination among its members and also strengthening interaction between the G20 and Low-Income Developing Countries (LIDCs). Turkey aims to channel the influence of G20 to reach at concrete and beneficial outcomes for the global community. In this regard, Spain, Azerbaijan, Singapore and the chairs of ASEAN (Malaysia), African Union (Zimbabwe) and NEPAD (Senegal) are invited to the G20 meetings in 2015. The G20 members are: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States and the European Union. Apart from G20’s official engagement groups B20, C20, L20, T20 and Y20, Turkish presidency will be launching a new engagement group W20 (Women20), concentrating on how to enhance the role of women in business. Fact Sheet: G20 Turkey 2015 | 2 Turkish Presidency Priorities In 2015, the Turkish G20 Presidency will focus its efforts on ensuring inclusive and robust growth through collective action. This can be formulated as the three I’s of the Turkish Presidency: Inclusiveness: At the domestic level, in order to ensure that the benefits of growth and prosperity are shared by all segments of society, the Turkish Presidency will emphasize issues pertaining to small and medium sized enterprises (SMEs) as a crosscutting subject, follow up on the commitment to strengthen gender equality in employment as well as address youth unemployment. At the international level, challenges facing Low Income Developing Countries (LIDCs) will be raised more vocally in the G20 agenda. Implementation: The G20 members have committed to lifting the collective economic growth by an additional 2,1% by 2018, which will bring an additional 2 trillion US Dollars to the world economy, equal to the size of the Indian economy. Implementation of the collective G20 commitments will be vital for the credibility of G20. To keep G20 accountable to its reform commitments, the Turkish Presidency aims to develop an implementation monitoring mechanism with the cooperation of members and the contribution of international organizations. Investment for growth: Investment is a central theme for the Turkish Presidency agenda, as it is critical both for lifting the global growth potential and also for generating new jobs. KEY G20 EVENTS in 2015 Finance Ministers Meetings: February 9-10, 2015, Istanbul, TURKEY April 17, 2015- Washington, D.C., USA September 4-5, 2015- Ankara, TURKEY Working Dinner: October 8, 2015- Lima, PERU Food and Agriculture Ministers Meeting: May 6-8, 2015- Istanbul, TURKEY Labor and Employment Ministers Meeting: September 3-4, 2015- Ankara, TURKEY Tourism Ministers Meeting: September 29-30, 2015, Ankara, TURKEY Energy Ministers Meeting: October 2, 2015-Istanbul, TURKEY (First Time in G20 History) Trade Ministers Meeting: October 5-6, 2015- Istanbul, TURKEY G20 Leaders Summit : November 15-16 2015, Antalya, TURKEY
November 6, 2011
China to Inject Over £98.5 Billion Into Money Market-Report
SHANGHAI (Reuters) – China is likely to inject more than 1 trillion yuan (£98.5 billion) into the money market in the next two months via annual subsidies from the Ministry of Finance, the official China Securities Journal on Monday quoted a research report as saying.
The injection will help improve liquidity, which has been impacted by the government’s tight monetary policy in place since October last year, the newspaper quoted the report by China International Capital Corp (CICC) as saying.
The Finance Ministry typically offers subsidies to various industries and sectors in the last two months of each year as part of distribution of the government’s annual tax income.
The ministry does not publicise these subsidies but the market estimated they totalled 1 trillion-2 trillion yuan in 2010.
The People’s Bank of China (PBOC) has not raised interest rates or bank reserve requirement ratios (RRR) since July in a sign that the government may be considering loosening its tight monetary stance amid the market turmoil sparked by the euro zone debt crisis.
The central bank previously instituted a slew of rate and RRR hikes as inflation repeatedly hit three-year highs.
Those steps offset the impact of liquidity injections via Finance Ministry subsidies late last year, but the market widely expects the PBOC will leave the subsidies to improve market liquidity this year, traders have said.
(Reporting by Lu Jianxin and Carrie Ho; Editing by Jonathan Hopfner)