Cool reception for India central banker urging global cooperation
By Jonathan Spicer
WASHINGTON, April 10 (Reuters) - The head of India's central bank ran into a wall of resistance on Thursday when he urged some counterparts in developed economies to more formally consider the effects their domestic stimulus has on emerging markets.
Alongside central bankers from the United States, Europe, and Brazil, Raghuram Rajan took the stage at a high-profile event here to list his proposals for better monetary cooperation and a global "safety net" that could provide funds for countries in case of economic emergency.
He has grown increasingly vocal for change given how hard the currencies and stocks of emerging economies such as India have been rocked by big shifts in capital flows brought on by the unprecedented monetary accommodation in rich nations.
"All I'm calling for is we should examine the situation and spillover effects, by all means empirically, to the extent we can," Rajan, governor of the Reserve Bank of India, said after giving a speech at the Brookings Institution.
Emerging markets absorbed a flood of investment in the wake of the global recession as central banks in developed nations sharply depressed interest rates, sending investors scrambling for higher yields in countries like Turkey, Argentina and India.
While the Bank of Japan and the European Central Bank could pump even more cash into global markets with pending bond-buying plans, the U.S. Federal Reserve began this year to slow its money printing, causing headaches for policymakers like Rajan who saw emerging currencies tumble last year when the Fed first indicated bond purchases would be tapered.
Citing an International Monetary Fund report published on Tuesday, Rajan said the message is: "Industrial countries are going to do what they have to do. Emerging markets have to adjust."
"I think we need language which is more even handed," added Rajan, a former IMF chief economist. "It's not that emerging markets have infinite ability to adjust and so we should keep that in mind going forward." Continuación...