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Brexit and refugees join G-20 worry list in draft communique
[SHANGHAI] The Group of 20 added a potential Brexit and an escalating refugee crisis to its long worry list, even as it argued recent market volatility didn't reflect global economic fundamentals.
In a draft of the communique obtained by Bloomberg News, the G-20 members agreed to use monetary, fiscal and structural tools to boost growth and calibrate and communicate their policies. Monetary policy alone can't bring balanced growth, according to the document, which one person participating in the drafting process said would see only minor revisions.
Finance chiefs from the G-20 nations agreed to "consult closely" on foreign exchange markets, warning that excessive volatility can hurt financial and economic stability and promised to improve their monitoring of capital flows in an effort to identify potential risks sooner.
The group reiterated past pledges to refrain from competitive devaluations. Key economic risks also include escalated geopolitical tensions, a large drop in commodity prices, and volatile capital flows.
"While recognizing these challenges, we nevertheless judge that the magnitude of recent market volatility has not reflected the underlying fundamentals of the global economy," the draft says.
"We expect activity to continue to expand at a moderate pace in most advanced economies, and growth in key emerging market economies remains strong."
The draft communique also stressed the importance of a safety net for the global financial system.
Central bankers and finance ministers from the G-20 are gathered for talks in Shanghai, with a final communique expected at the conclusion of sessions on Saturday.
Ahead of the talks, policy makers and investors had urged G-20 members to do more to stoke growth after steep losses on global stock markets since the beginning of the year.