World financial leaders will agree to calibrate and communicate monetary policy carefully to avoid triggering capital flight, but will not call an expected US rate rise a risk to growth, a draft communique showed on Friday.
Many emerging market economies are concerned that when the US Federal Reserve raises borrowing costs, investors will withdraw from other markets and buy dollar assets, weakening other currencies and creating turbulence as capital flees.
Officials from emerging markets wanted the communique from finance ministers and central bank governors of the Group of 20 biggest economies, meeting in Turkey, to say that a US rate rise now would be a risk to growth.
“We note that in line with the improving economic outlook, monetary policy tightening is more likely in some advanced economies,” the draft communique said.
“We will carefully calibrate and clearly communicate our actions to minimize negative spillovers, mitigate uncertainty and promote transparency,” said the draft, which may yet change before it is finally agreed on Saturday.
An earlier version of the text said policy tightening in developed economies “may remain one of the main sources of uncertainty in financial markets”.
“In one of the wild formulations it said that this was the biggest threat to the world economy. This was killed immediately and forever,” a Russian source said earlier.