Monetary Policy Coordination and the Role of Central Banks

Rakesh Mohan and Muneesh Kapur

No 2014/070, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; emerging market; central bank; monetary policy; economy; interest rate; Capital flows; central banks; coordination; emerging markets; unconventional monetary policy; spillovers; capital account; EME authority; EME authorities; fast-growing emerging market economies; monetary policy coordination; Fed's monetary policy; deficit EMEs; support emerging market economies; Fed chairman Bernanke; EME need; Unconventional monetary policies; Financial sector stability; Global (search for similar items in EconPapers)
Pages: 34
Date: 2014-04-29
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Citations: View citations in EconPapers (13)

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