D-8 central banks chiefs to tackle challenges together

Agree to establish trade, economic links, frame joint fiscal, monetary policy.

ISLAMABAD: The governors of central banks of Developing-8 (D-8) countries on Wednesday showed their resolve to collaborate in the formulation of fiscal and monetary policies in the backdrop of an uncertain outlook for the global economy.

In a joint communiqué issued after the second meeting of the governors of the central banks, they agreed to make joint strategies to cope with persistent challenges of low growth and high unemployment. The D-8 countries also agreed to establish banking links, reduce dependency on traditional trade partners by shifting focus to member countries and enter into currency swap arrangements for promoting trade and smoothing capital flows.

The D-8 governors forum was established to increase understanding of each other’s economic and financial issues and enhancing cooperation among the member countries. The eight D-8 Summit is taking place in Islamabad. The summit meeting will take place at the Presidency and after that a joint declaration will be issued.

“The global economy continues to face a number of challenges. External, fiscal and financial imbalances persist, creating challenges on economic growth and employment”, according to the communiqué.

It added global growth is projected to drop in 2012 because of weak economic activity in the US and deteriorating sovereign and banking sector developments in Europe. As a result, the real gross domestic growth (GDP) growth in the emerging and developing economies is going to slow down further.

In their efforts to cope with challenges, the D-8 governors agreed to formulate monetary and financial policies to support sustainable growth strategy in D-8 countries in the backdrop of an uncertain outlook for the global economy.

The D-8 countries will also work to promote innovative financial inclusion policies, explore opportunities in Islamic finance, establish information exchange and promote peer learning amongst the D-8 central banks.

The communiqué said that since some of the member countries were facing structural challenges while others were subject to cyclical problems, the D-8 will develop policy tools to buffer the economy against the global slowdown.

The next meeting of the governors of central banks of the D-8 countries is expected to take place in 2014 in Turkey.

Published in The Express Tribune, November 22^nd, 2012.