Today’s G20 meeting for finance ministers and CB-governors is under Chinese chairmanship while Beijing is struggling with economic challenges at home. Perhaps this explains the lack of new initiatives. The world economy is in need of discussion and solutions to a couple of problem areas:
1. It is getting crucial to wipe out downside risks to global growth.
2. Monetary policy has largely become obsolete and focus should now be on coordination and fiscal policy.
3. EM-countries should be able to devalue their currencies while developed economies should abstain from interventions
4. Debt and credit risk levels are too high and need to be addressed, if necessary with central bank-CE (credit easing).
5. Preparedness to meet a Japanese-like growth environment in coming few years. We can look forward towards a G20 communique tomorrow morning – but hold back expectations.
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