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. 14/70
Subject:
Capital flows Central bank role Central banks Central banks and their policies Developed countries Emerging markets Monetary policy Spillovers
English
Publication Date:
April 29, 2014
ISBN/ISSN:
9781484362518/1018-5941
Stock No:
WPIEA2014070
Format:
Paper
Pages:
34
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