Merkel backs tapering ahead of G20
Angela Merkel's government is the latest to back the US Federal Reserve's withdrawal of monetary stimulus despite continuing emerging market turmoil, reports have suggested.
A German government official told reporters in Berlin the German Chancellor's administration sees US monetary normalisation as necessary, according to Bloomberg.
The comments come after Australian Treasurer Joe Hockey compared the Fed's bond purchases to a drug the world cannot rely on forever.
While these developed economies may support tapering, the impact on emerging markets continues to cause concern. This weekend, central bankers and finance ministers from the Group of 20 are expected to prioritise discussing the issue.
However, the German government source said it is up to individual countries to ensure they are robust enough to cope with the change, and politicians should not interfere with the policies of independent central banks.
In January, the MSCI EM index fell 6.6% as the central banks of South Africa and Turkey hiked rates in a bid to end currency volatility, and investors embarked on a new round of selling in emerging market economies.
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