Global monetary coordination a casualty of economic volatility, Lujiazui Forum attendees say

Improving coordination in global monetary policy seems off the table for now amid the trade tensions triggered by US President Donald Trump's tariffs, according to several participants at the Lujiazui Forum in Shanghai.

"The policies of the US have significantly escalated a trade war, even though some of the measures have been temporarily suspended," said Giovanni Tria, former Italian minister for economy and finance. "The policies have already introduced more market volatility and weakened confidence in the US dollar and American Treasury bonds."

Since April, world trade has been plunged into disruption by Trump's tariffs on nearly all trading partners, putting the world economy under stress. Some of the tariffs have been suspended under a 90-day truce to facilitate trade negotiations.

But those trade talks are being conducted on a country-by-country basis.

"The Trump administration hates multilateralism," said Christopher Pissarides, a Regius professor of economics at the London School of Economics. "It is doubtful whether US would accept global monetary policy coordination given its 'America first' policy. Hopefully, the Federal Reserve can exercise its independence to work with other central banks."

Monetary policy cooperation would lead to faster stability, he added.

The annual Lujiazui Forum in Shanghai brings together domestic and global financial policymakers and players. It has been a high-profile event on China's finance-industry calendar since 2008.

Zhou Xiaochuan, former governor of China's central bank, said the necessity of global monetary policy coordination is vital amid faster globalization.

"When major economies change their policies, there are spill-over effects," he said. "That is especially true during a crisis that can convey danger… you can take the 1998 Asian financial crisis as a prime example."

Christopher Hayward, chairman of the Policy and Resources Committee of the City of London Corporation, said information sharing fosters trust.

"The UK and China have revived dialogue on monetary policies, and that is good for the health of our economy but also for the global economy," Hayward said.

Hubertus Vath, managing director of Frankfurt Main Finance e.V., said new frameworks are being shaped even amid a decoupling trend.

"You can see deeper integration within Europe, while China also has closer ties with areas such as Southeast Asia and the Middle East. There is a re-focus."

He also predicted that even though the US dollar will continue as the leading global currency, the importance of the euro and yuan will increase.

Andreas G Scholz, chief executive of dfv Euro Finance Group, said the world needs global monetary policy coordination in a time of uncertainty.

"Due to all the geographical risks, we need more financial stability," Scholz said. "Regulations and political support are important, and I believe big markets like Europe and China can do well. We need trade and investment; we don't need conflict."

Lujiazui, the financial heart of the Pudong New Area, is often compared to New York's Wall Street and hosts China's largest number of financial markets.

The forum, which ends today, has unveiled new policies to build Shanghai into a global financial center, including strengthening the development of cross-border yuan payment and settlement systems, and steadily expanding opening up of the financial sector.

"Shanghai will evolve into an international financial hub that matches the country's overall strength and global influence over the next five to ten years," according to a newly released official guideline.