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2016年3月 1日 (火)

G20協調 緩和依存から脱却を

--The Asahi Shimbun, Feb. 28
EDITORIAL: G-20 members need to end dependence on easy money policies
(社説)G20協調 緩和依存から脱却を

The top finance officials of the world’s major economies met last week for the first time since global financial turbulence started early this year.

The meeting of Group of 20 finance ministers and central bank governors, which ended Feb. 27 in Shanghai, confirmed the nations will “use all policy tools” to prevent a further rise in global financial risks.

The opportunity for the G-20 members to show they are ready to work together may have helped suppress market turmoil. But the occasion may have also revealed that it is never easy for the G-20 to come up with effective, concrete measures.

A slowdown in the Chinese economy, a sharp drop in crude oil prices, and the recent interest rate hike in the United States are believed to be the primary factors behind the market anxiety.

Instability in the world, as exemplified by the influx of refugees into Europe, rising tensions over North Korea and the chaotic situation in the Middle East, is another factor leading markets to believe the global economy could remain sluggish over the long term.

Since the 2008 collapse of U.S. investment bank Lehman Brothers triggered a worldwide financial crisis, all major economies of the world have been reacting to similar situations with stimulus packages and monetary easing.

But those countries have used up almost all available means, leaving little room now for additional measures.

Moreover, the excess of such response measures has generated investment bubbles in emerging economies and natural resources, which ended up triggering the financial turbulence we are currently in. Ironically enough, the responses to crises have engendered other crises.

To end this cycle, the major economies should refrain from indulging further in stimulus spending and easy money. While awareness of that issue was not shared during the G-20 meeting, it is probably high time its member states change course.

The most necessary policy measure is structural reform, designed to achieve long-term economic stability. For China, that reform would include clearing overcapacity and excessive debt and reforming state-owned enterprises; in Europe, deepening fiscal integration; and in Japan, reforming tax and social security systems and stabilizing state finance.

Amid the shortage of effective means, there are worries that countries may rush to devalue their currencies in favor of their own export industries. The G-20 members confirmed during the latest meeting that they will refrain from “competitive devaluations.”

But the Bank of Japan’s recently introduced negative interest rate policy has devaluing effects. If Japan and Europe, which have adopted that policy, were to continue or even intensify it, that could trigger a devaluation race across the globe.

In a worrisome development, leading candidates for the U.S. presidential election, including former Secretary of State Hillary Clinton, are blaming Japan for moving to weaken the yen.

After all, the super-easy monetary policy, being continued by Japan and Europe, is nothing more than a stopgap stimulant, and it has yet to create the economic growth expected of it. Moreover, gradual erosion of market functions, a side effect of that policy, is growing more serious as the policy becomes prolonged.

Japan and Europe should outgrow their dependence on easy money as early as possible. That is precisely what the major economies of the world should be working together for.


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