Monday September 3, 2012
Cash inflows boost our currency, says Zeti
JACKSON HOLE: Tan Sri Dr Zeti Akhtar Aziz, Malaysia's central bank governor said the highly accommodative monetary policy environment has generated higher global liquidity.
It has contributed to the recent surges in capital flows to emerging economies.
“These inflows have resulted in significant strengthening of our currencies, rising asset prices, credit growth and for some, overheating conditions in our economy. This has been partially offset by deleveraging in developed economies.
“For an open economy where exports are more than 150% of gross domestic product, that has consequences on our economy,” she said in her speech on Saturday when commenting on the effect that monetary policy easing in developed economies has had on emerging economies at a meeting of central bankers in Jackson Hole, Wyoming.
Bloomberg reports Zeti as saying for emerging Asian economies “an important policy shift is to rebalance our economies and diversify our sources of growth” and “promote domestic demand, in particular domestic consumption.
“From being export led, domestic demand has become an important source of growth.
“Asia is therefore now shifting from being global producers to being global consumers.”
She said the growth of Asia's domestic banks had “allowed the financial intermediation process to continue without disruption during the recent global financial crisis.”
Emerging Asian economies will “continue to be vulnerable” to these global shocks.
“To be in a better state of readiness and to withstand these eventualities, the policy priorities are therefore to build resilience.”
Meanwhile, a Bank Negara spokeswoman said Zeti was invited to speak at the prestigious Annual Economic Policy Symposium at Jackson Hole, where the Federal Reserve Bank of Kansas City hosts more than 100 central bankers, policymakers, academics and economists from worldwide from Aug 30 to Sept 1.
Prominent speakers include Federal Reserve chairman Ben Bernanke, Bank for International Settlements general manager Jaime Caruana, Kansas City Fed president Esther George, as well as professors and central bank governors.
The overall theme of the Economic Symposium is “The Changing Policy Landscape”. Zeti's session, in particular was the “Overview Panel: Global Policy Perspectives”.