Monetary Policy Coordination and the Role of Central Banks
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Summary:
The unconventional monetary policies (UMPs) pursued by the advanced economies (AEs) have posed macroeconomic challenges for the emerging market economies (EMEs) through volatile capital flows and exchange rates. AE central banks need to acknowledge and appreciate the spillovers resulting from such UMPs. Central banks of the AEs, who have set up standing mutual swap facilities, should explore similar arrangements with other significant EMEs with appropriate risk mitigation measures. These initiatives could do much to actually curb volatility in global financial markets and hence in capital flows to EMEs, thus obviating the need for defensive policy actions on the part of EMEs.
Series:
Working Paper No. 2014/070
Subject:
Balance of payments Banking Capital flows Financial crises Financial sector policy and analysis Financial sector stability Monetary policy Spillovers Unconventional monetary policies
English
Publication Date:
April 29, 2014
ISBN/ISSN:
9781484362518/1018-5941
Stock No:
WPIEA2014070
Pages:
34
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