February G20 Meeting to Focus on Coordinated Efforts

For all the hopes of healing world markets, it’s hard to see how a ‘jarring January’ suddenly becomes ‘feel-good February’.

‘Febrile’ might be a better descriptor.

Tension is now growing between central banks and governments, urging calm, and global investors nursing heavy losses from one of the worst starts to the year on record.

Unnerved by the oil collapse and its fallout, China’s yuan ‘trilemma’ and growing fears of world recession, for many money managers this will be at best a long haul with no easy fixes.

“Central banks, although remaining vigilant on financial stability, are progressively losing effectiveness, and may fail to effectively curb market volatility in the medium term as they did after the Great Financial Crisis,” said Giordano Lombardo, Group Chief Investment Officer at Pioneer Investments.

So do policymakers go up a gear or stand back a little and hope warm words and small monetary tweaks limit the shakeout?

So far, they are sticking to the script. Measures mooted over the past two weeks are all consistent with G20 finance chiefs, meeting in Shanghai on Feb. 26 and 27, reading straight from last year’s playbook.

Sticking to standing G20 communiques, central banks have so far been true to the pledge “to monitor financial market volatility and take necessary actions.”

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza