"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. We will monitor these risks and continue to strengthen macroeconomic, structural, and financial policy frameworks, and other complementary measures, as the best response to managing risks, and meet our G20 exchange rate commitments."
What kind of world am I living in when the G20 states that it is mindful of excessive risk that they created through excessive liquidity? Central banks created low interest rates and low volatility. Now they are going to watch and strengthen the frameworks to protect investors? This is code for more regulation and financial repression which will hurt investors. Central banks, by cutting rates to negative levels, created the "search for yield". Bank regulation created the opportunity for "shadow banking" which now needs to be better controlled.
The G20 has created a risky environment and now want to change the framework to control the risks that they formed. In what world does this make sense? The investor advice has been to "not fight the Fed" and stay long to ride the liquidity wave. This will be good advice until it does not work.
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