G-20 Says Stablecoin Regulation Needed to Curb Risks: IMF Update
G-20 Says Stablecoin Regulation Needed to Curb Risks: IMF Update
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Stablecoin regulations must be in place to address risks before any of the digital currencies are issued, according to the Group of 20 nations.
“While acknowledging the potential benefits of financial innovation, we agree that global stablecoins and other similar arrangements with potential systemic footprints give rise to a set of serious public policy and regulatory risks,” G-20 finance ministers and central bank governors said in a statement on Friday in Washington. Risks include money laundering and illicit finance, the group said in a statement.
“We must consider appropriate regulations,” Bank of Japan Governor Haruhiko Kuroda said at a briefing, adding that the global circulation of major stablecoins “could affect the stability of monetary policy and financial system.”
Meanwhile, there was no consensus at G-20 about whether monetary policy may be approaching its limits or if the scope is narrowing, Kuroda said. On Japan, he reiterated his view that the BOJ is able to further ease policy if needed.
Australia, Germany Agree on Fiscal Issues (12:45 p.m.)
Amid a chorus of calls for governments to stimulate their economies through increased spending, Australia and Germany are standing apart from the crowd.
Officials, economists and investors attending the International Monetary Fund’s annual meetings in Washington have zeroed in on the need for fiscal stimulus to shoulder the burden along with monetary policy.
Yet finance officials from Berlin and Canberra say they don’t see the urgency.
Australian Treasurer Josh Frydenberg told Bloomberg Television Friday that his government’s push for a budget surplus and delivering a growing economy aren’t mutually exclusive. That’s even as the central bank is forced to lower interest rates to record lows.
“We can still deliver the surplus as promised as well as see the Australian economy continue its record run of growth,“ said Frydenberg.
It was a similar message from German Finance Minister Olaf Scholz who highlighted his government’s investment in climate change policies and tax cuts as evidence of the support being offered to growth. “There’s a lot of public investment,” he told Bloomberg Television.
Still, in a nod to the uncertainty out there, Scholz signaled the biggest risks to Germany’s economy remain external. “In the end the more important question is what will happen the global economy,” he said.
China’s Slowing Economy (12:45 p.m.)
China’s economy may be slowing, but there’s no reason to hit the panic buttons yet. That’s the view of Kenneth Kang, deputy director at Asia and Pacific Department at the IMF, who highlighted the nation’s growing debt pile as one reason why further stimulus measures need to be targeted toward rebalancing the economy.
“In our view that support should be contained, calibrated to the shock, it should be temporary in nature and it should be focusing on rebalancing growth down the road,” Kang said in an interview.
The slowest growth in decades has prompted debate about how much additional support the authorities in Beijing need to roll out.
Gross domestic product rose 6% in the July-September period from a year ago, the slowest pace since the early 1990s and weaker than the consensus forecast of 6.1%. On the upside, factory output improved and retail sales held up, but slowing investment growth remained a concern.
If conditions were to worsen materially from here, that would change things.
IMF’s Brekk Says Japan Isn’t Case Study in MMT (11:25 a.m.)
The Bank of Japan’s monetary policy aims to boost inflation and differs from Modern Monetary Theory, according to a senior official at the International Monetary Fund.
“We do not consider Japan a case study in MMT,” Odd Per Brekk, deputy director of the Asia and Pacific Department, said in an interview on the sidelines of the IMF meetings in Washington on Friday. “The proponents of MMT advocate permanently supplying monetary supply, or money supply, to finance fiscal deficits and boost economic activity both under normal and adverse conditions. The way we see it, this does not characterize the current situation in Japan.”
The BOJ’s purchases of Japanese government bonds have reduced the financing cost for the government, but that’s not the objective of the central bank’s policy as it aims to achieve its 2% inflation target, Brekk said.
The nation’s finance ministry has also been trying to implement gradual fiscal consolidation, and a sales tax increase on Oct. 1 was a right step toward that goal, according to Brekk.
His comments come as the government mulls over the need for an extra budget boost to offset economic damage caused by the typhoon Hagibis over the weekend.
In the short term, the government has some space to respond to unexpected impacts to growth like the typhoon, Brekk said, while in the medium term there is a need for fiscal adjustment.
“Over time, we are advocating a gradual, but growth-friendly, fiscal consolidation.”
IMF Asia Officials Call For Action on Climate Change (10 a.m.)
Officials from the International Monetary Fund’s Asia department delivered a stern warning on climate-change risks: governments need to urgently act.
“Asia is definitely the most vulnerable region for this climate change,” Changyong Rhee, director of the Fund’s Asia Pacific department, told reporters on Friday. “There is an immediate need for every country to address this issue.”
By investing in clean-energy technology, policy makers will unleash new sources of growth. Rhee said Asia can lead the way.
“I think one thing Asia policy makers have to think about is this is an opportunity to develop new technology to leapfrog,” he said.
Some of the IMF’s biggest downward growth revisions this week were in Asia, including in Hong Kong, South Korea and Singapore. The common denominator was China’s slowdown and spillover from the U.S.-China trade war.
Emerging and developing Asia is now tipped to grow 5.9% this year, down from the 6.2% forecast given in July.
To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net;Enda Curran in hong kong at ecurran8@bloomberg.net;Yinan Zhao in Beijing at yzhao300@bloomberg.net
To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net, Jeff Kearns, Sarah McGregor
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