G20 to boost growth but warns of risk in financial markets

The Group of 20 meeting of finance ministers and central bank chiefs over the weekend focused on boosting global economic growth.

“We are determined to lift growth, and countries are willing to use all our macroeconomic levers – monetary, fiscal and structural policies – to meet this challenge,” said Australian Treasurer Joe Hockey, who hosted the event.

However, it was also mindful of the risk arising from monetary stimulus, according to a Bloomberg report.

“We are mindful of the potential for a build-up of excessive risk in financial markets, particularly in an environment of low interest rates and low asset price volatility,” the meeting communique said.

The following are some pertinent statistics cited by Bloomberg:

• The Standard & Poor’s 500 Index is in the midst of its longest streak of quarterly gains since 1998, rising last week to a record.
• The Chicago Board Options Exchange Volatility Index ended last week at 12.11, 36 percent below its average of the past five years.
• Japan’s Nikkei Stock Average Volatility Index fell to 16.69 last week, 31 percent below its five-year average.
• The extra return investors demand to hold corporate bonds instead of sovereign securities is at 109 basis points, near the seven-year low of 105 reached in June, according to a Bank of America Merrill Lynch Global Corporate Index.