Frankfurt, February 5:

German government will put forward proposals to help emerging market economies build up their domestic bo-nd markets so as to better cushion them against potential financial shocks, Financial Times reported today.

Berlin is to present its proposals to the upcoming mee-ting of Group of Seven (G7) finance ministers and central bank chiefs in Essen at the weekend, the FT and its German-language edition, Financial Times Deutschland, reported, quoting an official. “It is mainly about making countries less susceptible to financial shocks by developing local and regional bond markets in domestic currencies,” Joerg Asmussen, head of the ministry’s international department, told the paper.

Attending this weekend’s summit in Essen’s prestigious Villa Huegel mansion will be the finance ministers and central bank chiefs of Britain, Canada, France, Germany, Italy, Japan and the United States, as well as top officials from Brazil, China, India, Mexico, Russia and South America.

On the agenda in Essen financial market transparency, with particular focus on hedge funds, the reform of the International Monetary Fund (IMF), the fight against corruption in Africa, energy and climate change. The recent sharp fall in the yen and exchange rates in general will also be discussed.

Strong and liquid local bond markets are seen as an important cushion against potential financial shocks, protecting against sudden swings in global exchange rates, and allowing governments, companies and ban-ks to broaden their sources of financing, Financial Times reported. “In industrial cou-ntries, outstanding bonds amount to 140 per cent of GDP. In emerging econo-mies, it is only 43 per cent.”

Germany believes that developing and emerging eco-nomies could be given help in improving legal systems, developing common standards and establishing fina-ncial market supervisory authorities, the FT reported.

Japan unfazed

TOKYO: The weak yen is expected to loom large over this week’s meeting of world finance chiefs, but any European calls for action to boost the currency are likely to fall on deaf ears in Japan. The yen has fallen to record lows against the euro and to a four-year nadir against the dollar since the Bank of Japan (BoJ) last month decided to keep its super low interest rates at 0.25 per cent amid political pressure. That has caused disquiet in Europe whe-re politicians are beco-ming increasingly vocal about the weakness of Japanese currency whi-ch makes life tougher for exporters in the 12-nation euro zone. — AFP