February 23, 2016 - 6:43 PM EST
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G-20 to pursue cooperation for financial market stability

Finance chiefs of the Group of 20 economies are expected to seek cooperation in

Shanghai
later this week to stabilize financial markets, as tumbling stocks and volatile currencies have started to threaten global economic recovery.

At a two-day meeting starting Friday, the participants are likely to discuss ways to respond to such downside risks as plunging crude oil prices and

China's
economic slowdown as the country continues to address its structural problems.

On the first day of the meeting,

China
will host a high-level seminar on structural reforms, as the world's second-largest economy makes efforts to resolve its own problems such as excessive investments.

Finance ministers and central bankers from the G-20 are also expected to take up the issue of the

U.S.
monetary policy after the Federal Reserve raised interest rates from a record low in December, causing an outflow of funds from emerging economies.

In order to avoid risks in financial markets, "it is necessary to respond steadily to the global economic situations that have been factors in market fluctuation," Japanese Finance Minister Taro Aso told a press conference Tuesday.

Although participants in financial markets are awaiting a message from the G-20 economies to ease market volatility, it is not clear if they will be able to show unity and come up with effective ways to soothe the turbulence.

The meeting comes as worries persist over a prolonged oversupply of crude oil, as oil-producing countries have failed to reach a consensus to reduce output, while demand for oil is expected to remain sluggish amid a slowdown in emerging economies.

Reflecting the market's risk-averse mood, the yen briefly firmed to the upper 111 level against the

U.S.
dollar Wednesday from around 120 in early January.

The yen's gain has raised concerns that it would hurt the earnings of export-related Japanese firms and sharply driven down

Japan's
key Nikkei stock index.

As fears over a slowdown in emerging economies led to slides in crude oil and other commodity prices, other global stocks including in

the United States
and
China
have also lost ground considerably since the beginning of this year.

To bolster the economy, calls for stimulus measures may also emerge given that advanced economies have different stances on monetary policies, with

the United States
starting to normalize its policy while the Bank of Japan and the European Central Bank continue to adopt accommodative policies to support inflation.

With the attendance of central bank chiefs, any hints regarding the pace of

U.S.
interest rate hikes are also expected to draw attention.

BOJ Governor Haruhiko Kuroda is likely to offer explanations for the introduction of the negative interest rate policy that has pushed down rates sharply but raised fears that lower rates could erode banks' profits, leading to declines in their share prices.

The Organization for Economic Cooperation and Development said in its interim economic outlook report that monetary policy alone cannot work and called for "a stronger collective policy response," citing the need for fiscal policy and structural reforms.

The G-20 groups

Argentina
,
Australia
,
Brazil
,
Britain
,
Canada
,
China
,
France
,
Germany
,
India
,
Indonesia
,
Italy
,
Japan
,
Mexico
,
Russia
,
Saudi Arabia
,
South Africa
,
South Korea
,
Turkey
,
the United States
and the European Union.

==Kyodo

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Source: Equities.com News (February 23, 2016 - 6:43 PM EST)

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