New Monetary Policy Tools for Emerging Market and Developing Economies

December 2, 2021

The COVID-19 pandemic spurred Emerging Markets and Developing Economies’ (EMDE) central banks to introduce a wide array of unconventional monetary policy actions. These included asset purchases, typically of sovereign debt, to improve bond market liquidity and ease market stresses. These tools appeared effective in improving market functioning and are likely to remain a key component of the toolkit of EMDE central banks. Even so, the use of these tools is quite novel, and care must be taken to ensure that they are deployed to maximize effectiveness while minimizing risks, including of fiscal dominance. Important challenges lie ahead. Those EMDE central banks which undertook larger and more protracted interventions must design a strategy for exiting from UMP programs, and some EMDEs must consider how to transition away from providing direct financing to the government. Some EMDE central banks may also decide—perhaps down the road—that conditions warrant using balance sheet expansion to boost the macroeconomy, similar to the quantitative easing programs of many advanced economies.

Bo Li, Deputy Managing Director, IMF will open the event with a brief overview of some of the challenges currently facing central bankers. It will be followed by an in-depth panel discussion considering the conditions that may warrant the use of asset purchases and other unconventional monetary policy tools by EMDEs, and how these tools should be utilized to maximize effectiveness while minimizing risks to central bank balance sheets and independence. The panel will be moderated by Tobias Adrian, IMF Financial Counsellor, and will comprise Lesetja Kganyago, Governor, South African Reserve Bank; Elvira Nabiullina, Governor, Bank of Russia; and Carmen Reinhart, Senior Vice President and Chief Economist, World Bank Group.

This is a public event, and no registration will be required. The event will be livestreamed on this webpage on Thursday, December 2, 2021, 8:30 a.m. - 9:45 a.m. (ET).

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Agenda

December 2, 2021

8:30 – 8:32 a.m.

Welcome Remarks

Tobias Adrian, Financial Counsellor and Director of the Monetary and Capital Markets Department, IMF

8:32 – 8:40 a.m.

Opening Remarks

Bo Li, Deputy Managing Director, IMF

Read the Speech

8:40 – 9:45 a.m.

Panel Discussion

Moderator: Tobias Adrian

Panelists:

Lesetja Kganyago, Governor, South African Reserve Bank
Elvira Nabiullina, Governor, Bank of Russia
Carmen Reinhart, Senior Vice President and Chief Economist, World Bank Group