NEW DELHI (Reuters) - India urged the Group of 20 nations on Thursday to consider creating currency swap lines to mitigate the impact on emerging economies of the expected withdrawal of the U.S. Federal Reserve's vast monetary stimulus.
Describing the uncertainty and volatility in the external environment as "worrisome", India's top finance ministry official said the G20 should seek collaborative solutions with guidance from the International Monetary Fund.
The Fed indicated on Wednesday that its program of monthly bond purchases to keep long-term borrowing costs low was on course to end next month.
"In order to ensure that the growth outcomes are still achieved, are there solutions that the G20 can explore? Are swap lines a solution?" Finance Secretary Arvind Mayaram asked at a meeting of G20 deputy finance ministers.
"Let us get the IMF to analyse whether it is so," he added, according to an official transcript of his remarks.
India's rupee currency collapsed a year ago when the Fed first warned that it would dial back its programme of so-called quantitative easing, as a reversal of dollar flows exposed the country's gaping external deficits.
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The balance of payments crunch was a first test for Reserve Bank of India Governor Raghuram Rajan, who has since called for rich nations to take greater account of the "spillover" effects of their monetary policies on emerging markets.
By setting up swap lines, central banks would effectively backstop each other in the event of a run on a country's currency.
The pleas by Rajan, a former IMF chief economist, reflected growing concern among large emerging markets that the world's financial architecture operates for the benefit of rich Western countries.
In response the BRICS - Brazil, Russia, India, China and South Africa - have taken steps to strengthen cooperation such as setting up a joint development bank.
(Reporting by Douglas Busvine; Editing by Tom Heneghan)