Unconventional monetary policies to have negative effect, says Jaitley

Finance Minister Arun Jaitley has said unconventional monetary policies of developed countries could have negative spillovers on emerging economies.

"Emerging market economies face a high risk of negative spillovers from unconventional monetary policy actions of advanced economies," he said at a G20 meeting here.

"The uncertainties about their extent and eventual normalisation have induced greater volatility and intensified pressures on both emerging market currencies and capital markets."

Some emerging market economies, he said, have had to dip into their foreign exchange reserves in order to manage the effects of volatile currency markets and others had to shore them up in the absence of other adequate safety nets.

"Given these challenges, there is need for clarity in communications and forward guidance to minimise surprises," the finance minister added.

G20 members, Jaitley said, need to cooperate to cushion the impact of unconventional policies and their normalisation on affected economies which may face a flight of capital shortly similar to that of the "taper tantrum" of 2013.