Washington: Finance Minister Arun Jaitley has said unconventional monetary policies (UMP) of developed countries can have negative spill overs on emerging eoncomies.
"Emerging market economies face a high risk of negative spill-overs from un-conventional monetary policy actions of advanced economies.
"The uncertainties about their extent and eventual normalisation have induced greater volatility and intensified pressures on both emerging market currencies and capital markets," he had said at G-20 meeting here.
Some emerging market economies, he said, have had to dip into their foreign exchange reserves in order to manage the effects of volatile currency markets and others had to shore them up in the absence of other adequate safety nets.
"Given these challenges, there is need for clarity in communications and forward guidance to minimise surprises," the Finance Minister added.
He further said G20 members need to cooperate to cushion the impact of unconventional policies and their normalisation on affected economies which may face a flight of capital shortly similar to that of the "taper tantrum" of 2013.
At a meeting of BRICS Finance Ministers and Central Bank Governors on April 16 also Jaitley raised the issue of UMP and made a case for monitoring of UMPs by the International Monetary Fund (IMF) "to minimise their impact on other economies".
