Monetary Policy Coordination and the Role of Central Banks

Author/Editor: Rakesh Mohan ; Muneesh Kapur
Publication Date: April 29, 2014
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
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. 14/70
Subject(s): Monetary policy | Spillovers | Developed countries | Emerging markets | Capital flows | Central banks | Central bank role

Publication Date: April 29, 2014
ISBN/ISSN: 9781484362518/1018-5941 Format: Paper
Stock No: WPIEA2014070 Pages: 34
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