Title: Financial market depth: friend or foe when it comes to effective management of monetary policy and capital flows?
Abstract: In advice given to emerging market economies (EMEs), it is often emphasised that having developed financial markets would both enable them to manage capital flows more efficiently, thereby reducing the need to intervene in the foreign exchange markets, and allow for more effective monetary policy. But despite their evident benefits, it is also the case that developed financial markets can complicate the management of monetary policy and capital flows. This note examines both sides of the argument, but with a greater emphasis on the issues that highly developed financial markets can create for policymakers.
Publication Year: 2011
Publication Date: 2011-01-01
Language: en
Type: preprint
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