PARIS — Federal Reserve chairman Ben Bernanke warned Friday that capital inflows into emerging market countries are “imposing notable challenges” and called for collective efforts to create more balanced and sustainable global economic growth ahead of a meeting of Group of 20 finance ministers and central bankers who will have such a rebalancing at the center of their agenda.
Bernanke rejected charges that the Fed’s accommodative monetary policy is causing hot-money flows into emerging markets and creating negative spill-overs and instead put the onus on those countries to adjust their own policies, especially their exchange-rate policies.
He acknowledged that the United States and other advanced countries need to increase their national savings rates by reducing deficit spending.
Bernanke, in remarks prepared for a conference on global financial stability sponsored by the Bank of France, blamed large trade imbalances on a “two-speed” global recovery and said the world’s policymakers need to “reshape the international monetary system” to achieve more “balanced” and “sustainable” growth.
Bernanke offered a tacit defense of Fed accommodation.
“The global financial crisis is receding, but capital flows are once again posing some notable challenges for international macroeconomic and financial stability,” he said.
“These capital flows reflect in part the continued two-speed nature of the global recovery, as in the emerging markets is far outstripping growth in the advanced economies.”