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WB blames US for unruly inflows

20 October 2010 11:21 (UTC +04:00)

Baku - APA-Economics. Surging capital inflows threaten Asiaâ€™s economic stability, the World Bank warned on Tuesday, a day after US treasury secretary Timothy Geithner sought to draw the venom from a global row over currencies by vowing not to devalue the dollar, Indian Express reported.

The World Bank buttressed the argument made by China and others that US policies are sending a wave of cash flowing into higher-yielding emerging markets, undermining their export competitiveness and pumping up inflation and asset bubbles.

â€œWe are seeing an effort by developing East Asia to deal with the large amounts of liquidity driven in very large part by the monetary policy easing in the United States,â€ Vikram Nehru, the bankâ€™s chief economist for Asia-Pacific, told reporters in Tokyo.

Nehru, presenting a semi-annual report, urged policymakers to learn the lessons of the 1997-98 Asian financial crisis, when an influx of footloose global capital inflated property and equity prices, only for them to collapse when the money flows reversed.