Finance Minister Taro Aso said on Tuesday that Japan wants to seek a response to the global market turmoil stemming from risk aversion when the Group of 20 finance leaders meet in Shanghai this week.
“We want to consider ways to firmly respond to the global economic situation, which has been the factor behind market fluctuations,” Aso told reporters after a cabinet meeting, Reuters reported.
The G20 will discuss China’s structural problems such as excess capacity and excess credit, US monetary policy and its communication with the market, and oil price declines, he added.
The United States, meanwhile, will call on G20 countries this week to use fiscal policy in order to boost global demand, a senior US Treasury official said on Monday.
“We will urge greater use of policy space, including fiscal space, to bolster global demand. That would lead to strengthened confidence and I would expect reduce volatility,” the treasury official said in a preview call with reporters ahead of a G20 meeting to be held on Feb. 26-27 in Shanghai, China.
While there, the United States will also urge all members to refrain from manipulating exchange rates for competitive purposes, in line with existing G20 commitments, said the official, who spoke on condition of anonymity.
“I see those commitments as being a strong indication from G20 members that they will manage their currencies in ways that are globally consistent. I think that those commitments are very, very important,” the official said.
China’s economic slowdown has also skittered financial markets as it seeks to rebalance its economy toward consumption-led growth.
The senior treasury official said that supply-side reforms in China were “crucial” as it pivots to a stronger services sector, and praised the country’s ongoing efforts to reduce excess capacity.
On Friday, IMF chief Christine Lagarde called on G20 officials to focus on global economic spillovers from their policy decisions.
An increasing number of central banks, including the European Central Bank and the Bank of Japan, have turned to negative interest rates over the past year in order to avoid deflation and promote economic growth.
