RBI governor calls for better access to currency swap lines
He said emerging markets have been largely excluded from this global network, forced instead to husband huge foreign-exchange reserves they can deploy to stabilize their economies in the event of economic upheaval.“Some of us would go as far as describing this situation as virtual apartheid, in which systemic central banks protect themselves and their self interest.
Meanwhile, EMEs on the receiving end of global financial turbulence are systematically denied access,” Mr.Patel said, referring to emerging market economies.“The time has come to end this sectarian approach and access to swap lines be made equally available,” he said.Mr.Patel´s remarks come as emerging markets brace for the ripples of changing centralbank policy in advanced economies.
The Fed, the ECB and the Bank of England have begun taking steps to withdraw some of the monetary stimulus put in place to shore up their economies since the world tipped into recession in 2009.Rising interest rates in advanced economies can pull capital out of emerging markets, causing a headache for finance ministries and central banks trying to steer such economies.
Agustín Carstens, the governor of Mexico´s central bank, said at the same G30 panel that with central bank policy shifting in the West, “emerging markets need to prepare for contingencies.” The G30 isaprivate group of prominent central bankers, financiers, regulators and academics
The Business Standard, New Delhi, 17th October 2017