A Safe-Asset Perspective for an Integrated Policy Framework

Markus Brunnermeier, Sebastian Merkel and Yuliy Sannikov

Chapter 8 in The Asian Monetary Policy Forum:Insights for Central Banking, 2021, pp 302-332 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Borrowing from Brunnermeier and Sannikov (2016a; 2019) this policy paper sketches a policy framework for emerging market economies by mapping out the roles and interactions of monetary policy, macroprudential policies, foreign exchange interventions, and capital controls. Safe assets are central in a world in which financial frictions, distribution of risk, and risk premia are important elements. The paper also proposes a global safe asset for a more self-stabilizing global financial architecture.

Keywords: Monetary Policy; Price Stability; Monetary Sovereignty; Monetary Policy Independence; Macroprudential Policies Financial Stability; Financial Volatility; Financial Globalization; Capital Mobility Trilemma; Dilemma; Small Open Economies; Emerging Market Economies; Exchange Rate Regime; Floating Exchange Rate; Pegged Exchange Rate; Real Exchange Rate; Nominal Exchange Rate; International Monetary System; Bond Markets; International Claims; Currency Market; Market Liberalization; Capital Control; Exchange Rate Intervention; Foreign Exchange Reserves; Dollar Hegemon; Dollar Dominance; International Payment System; Invoicing Currency; Integrated Policy Framework; Risk-on; Risk-off; Safe Assets; Global Financial Architecture (search for similar items in EconPapers)
JEL-codes: E4 E5 (search for similar items in EconPapers)
Date: 2021
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Working Paper: A Safe Asset Perspective for an Integrated Policy Framework (2020)
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