Weekend Economists Sit on a Wall August 23-25, 2013

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67. Central bankers debate risks from withdrawing global liquidity

http://uk.reuters.com/article/2013/08/25/uk-usa-fed-idUKBRE97N0CJ20130825

(Reuters) - Global financial stability is at risk as central banks draw back from ultra-easy policies that have flooded the world with cash, because emerging markets lack defences to prevent potentially huge capital outflows, top officials were warned on Saturday.

Central bankers from around the world, devoting the second day at their annual Jackson Hole policy retreat to the threats posed by global liquidity, heard two academic papers on the challenges, sparking a debate on actions and on coordination.

Bank of Japan Governor Haruhiko Kuroda told the audience, which included top officials from advanced as well as emerging economies, that the bold measures he had championed to spur his nation's moribund economy were bearing fruit.

"The bank's (policy) has already started to exert its intended effects," Kuroda said. The Bank of Japan has embarked on an aggressive bond-buying campaign to lift inflation in his country to 2 percent.