The influence of external factors on monetary policy frameworks and operations

Bank for International Settlements

No 57 in BIS Papers from Bank for International Settlements

Abstract: Economic and financial integration has reshaped the monetary policy frameworks and transmission channels in the emerging market economies (EMEs) over the past two decades. Economic and financial linkages have become stronger, resulting in greater synchronisation of business cycles across advanced and emerging market economies. This has led to the faster transmission of shocks, especially through financial channels. Against this background, the 16th annual meeting of Deputy Governors from the major emerging market economies, held at the BIS in Basel in February 2011, addressed the question of how external factors had affected monetary policy in EMEs over the past few years. The present volume brings together papers prepared for that meeting. The discussion was organised around four broad topics: (i) international banks, new liquidity rules and monetary policy in EMEs; (ii) exchange rates and monetary policy frameworks in EMEs; (iii) the implications of foreign exchange market intervention for central bank balance sheets; and (iv) additional supporting policies that central banks can use to address the policy dilemmas from the influence of external factors. One of the main conclusions of the meeting was that financial globalisation has multiplied the number of transmission channels and associated risks through which external factors influence domestic economic and financial conditions in EMEs. This complicates the assessment of the outlook for inflation and growth. It also introduces an additional dimension - the evaluation of financial stability risks - to the objectives of central banks. Monetary policy in EMEs has become much more complex as a result.

Date: 2011 Written 2011-10
ISBN: 92-9131-886-8
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Chapters in this book:

How have external factors affected monetary policy in the EMEs? , pp 1-8

Dubravko Mihaljek

International banks, new liquidity rules and monetary policy in EMEs , pp 9-35

Elod Takats and Agustín Villar

Exchange rate and monetary policy frameworks in EMEs , pp 37-63

Andrew Filardo, Guonan Ma and Dubravko Mihaljek

Foreign exchange market intervention in EMEs: implications for central banks , pp 65-86

Ramon Moreno

Annex: Alternative central bank policy instruments , pp 87-100

Dubravko Mihaljek and Agne Subelyte

External factors and monetary policy , pp 101-110

Miguel Angel Pesce

Issues in cross-border funding of chilean banks , pp 111-121

Kevin Cowan and Carla Valdivia

China's exchange rate and monetary policies , pp 123-128

Wang Xiaoyi

Monetary policy and the exchange rate in Colombia , pp 129-153

Hernando Vargas H

Long-run equilibrium exchange rate notions in monetary policy strategies: the case of the Czech National Bank , pp 155-162

Mojmir Hampl and Michal Skořepa

Loan-to-value ratio as a macroprudential tool - Hong Kong SAR's experience and cross-country evidence , pp 163-178

Hong Kong Monetary Authority

Monetary policy challenges during the crisis in a small open dollarised economy: the case of Hungary , pp 179-188

Áron Gereben, Ferenc Karvalits and Zalan Kocsis

External factors and monetary policy: Indian evidence , pp 189-199

Subit Gokarn and Bhupal Singh

The equilibrium real exchange rate for Israel , pp 201-213

Zvi Eckstein and Amit Friedman

Characteristics of international banks' claims on Korea and their implications for monetary policy , pp 215-230

Jong Hwa Kim

Financial market depth: friend or foe when it comes to effective management of monetary policy and capital flows? , pp 231-237

Sukudhew Singh

Global liquidity, capital flows and challenges for policymakers: the Mexican experience , pp 239-260

José Sidaoui, Manuel Ramos-Francia and Gabriel Cuadra

Capital flows, monetary policy and forex intervention in Peru , pp 261-274

Renzo Rossini, Zenon Quispe and Donita Rodriguez

External factors and Philippine monetary policy , pp 275-283

Diwa C Guinigundo

The role of the exchange rate in monetary policy in Poland , pp 285-295

Piotr Banbula, Witold Kozinski and Michał Rubaszek

Exchange rate flexibility and Russia's monetary policy shift , pp 297-299

Central Bank of the Russian Federation

Monetary policy in Saudi Arabia , pp 301-305

Abdulrahman Al-Hamidy

Recent developments in the Singapore economy , pp 307-314

Monetary Authority of Singapore

Monetary policy in the post-crisis world: the perspective from Thailand , pp 315-318

Bank of Thailand

Capital flows in the post-global financial crisis era: implications for financial stability and monetary policy , pp 319-343

Mahir Binici and Mehmet Yorukoglu

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