China should “set up a firewall” as uncontrolled dollar printing in the United States will drive more liquidity into emerging markets, a central bank adviser said on Thursday.
“The most urgent need for the emerging market economies is to curb capital inflows,” Xia Bin, an academic member of the central bank’s monetary policy committee, told a financial forum in Beijing.
Xia’s comments came as the US Federal Reserve announced a new round of quantitative easing – pledging to buy $600 billion of government bonds – to prop up the ailing economy.
Claiming the US quantitative easing was “unbridled money printing”, Xia said China should push for plans to stabilize the world’s major currencies at the upcoming G20 summit.
This sets the stage for what may be a very contentious G20 summit in Seoul next week and increases the event risk, which is currently off-radar and should be monitored closely.
Brazil’s Meirelles: Fed’s latest move on G20 agenda – Reuters
Emerging markets slam Fed’s QE2 stimulus – The Globe and Mail
‘Firewall needed’ to prevent cash surge – China Daily
China says inappropriate to target trade deficits at G20 – Reuters