The Influence of External Factors on Monetary Policy Frameworks and Operations

350 Pages Posted: 8 Feb 2012  

Renzo Rossini

Central Reserve Bank of Peru

Zenon Quispe

Central Reserve Bank of Peru

Donita Rodríguez

affiliation not provided to SSRN

Diwa C. Guinigundo

Government of the Republic of the Philippines - Monetary Stability Sector

Piotr Banbula

National Bank of Poland

Witold Koziński

National Bank of Poland

Michał Rubaszek

National Bank of Poland; Warsaw School of Economics (SGH)

Abdulrahman Al-Hamidy

Saudi Arabian Monetary Agency

Mahir Binici

Central Bank of Turkey

Mehmet Yorukoglu

University of Chicago - Department of Economics; University of Rochester

Dubravko Mihaljek

Bank for International Settlements (BIS) - Monetary and Economic Department

Előd Takáts

Bank for International Settlements (BIS)

Andrew J. Filardo

Bank for International Settlements (BIS) - Monetary and Economic Department

Guonan Ma

Bruegel

Ramon Moreno

Bank for International Settlements (BIS)

Agne Subelyte

Bank for International Settlements (BIS)

Miguel Angel Pesce

Central Bank of Argentina

Kevin Cowan

Inter-American Development Bank (IDB)

Carla Valdivia

affiliation not provided to SSRN

Xiaoyi Wang Sr.

Zhejiang University

Hernando Vargas H.

Independent

Mojmir Hampl

Czech National Bank (CNB)

Michal Skorepa

Institute of Economic Studies

Aron Gereben

affiliation not provided to SSRN

Karvalits Ferenc

affiliation not provided to SSRN

Zalan Kocsis

Independent

Subir Gokarn

affiliation not provided to SSRN

Bhupal Singh

Reserve Bank of India

Zvi Eckstein

The Interdisciplinary Center (IDC); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Amit Friedman

affiliation not provided to SSRN

Sukudhew Singh

Central Bank of Malaysia

José Sidaoui

Bank of Mexico

Manuel Ramos-Francia

Banco de México

J. Gabriel Cuadra Garcia

affiliation not provided to SSRN

Agustin Villar

Bank for International Settlements (BIS)

Jong H. Kim

affiliation not provided to SSRN

Date Written: October 1, 2011

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 synchronization 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 organized around four broad topics: international banks, new liquidity rules and monetary policy in EMEs; exchange rates and monetary policy frameworks in EMEs; the implications of foreign exchange market intervention for central bank balance sheets; and 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 globalization 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.

JEL Classification: E42, E44, E52, E58, F31, F34, F36, F42, F53, G21, G28, P52

Suggested Citation

Rossini, Renzo and Quispe, Zenon and Rodríguez, Donita and Guinigundo, Diwa C. and Banbula, Piotr and Koziński, Witold and Rubaszek, Michał and Al-Hamidy, Abdulrahman and Binici, Mahir and Yorukoglu, Mehmet and Mihaljek, Dubravko and Takáts, Előd and Filardo, Andrew J. and Ma, Guonan and Moreno, Ramon and Subelyte, Agne and Pesce, Miguel Angel and Cowan, Kevin and Valdivia, Carla and Wang, Xiaoyi and H., Hernando Vargas and Hampl, Mojmir and Skorepa, Michal and Gereben, Aron and Ferenc, Karvalits and Kocsis, Zalan and Gokarn, Subir and Singh, Bhupal and Eckstein, Zvi and Friedman, Amit and Singh, Sukudhew and Sidaoui, José and Ramos-Francia, Manuel and Cuadra Garcia, J. Gabriel and Villar, Agustin and Kim, Jong H., The Influence of External Factors on Monetary Policy Frameworks and Operations (October 1, 2011). BIS Paper No. 57. Available at SSRN: https://ssrn.com/abstract=1967114

Renzo Rossini

Central Reserve Bank of Peru

Jirón Miroquesada 441
Lima, Lima 1
Peru

Zenon Quispe

Central Reserve Bank of Peru ( email )

Jirón Miroquesada 441
Lima, Lima 1
Peru

Donita Rodríguez

affiliation not provided to SSRN

No Address Available

Diwa C. Guinigundo

Government of the Republic of the Philippines - Monetary Stability Sector

Philippines

Piotr Banbula

National Bank of Poland ( email )

00-919 Warsaw
Poland

Witold Koziński

National Bank of Poland

00-919 Warsaw
Poland

Michal Rubaszek

National Bank of Poland ( email )

00-919 Warsaw
Poland

Warsaw School of Economics (SGH) ( email )

Niepodleglosci 162
PL-Warsaw, 02-554
Poland

Abdulrahman Al-Hamidy

Saudi Arabian Monetary Agency

Saudi Arabia

Mahir Binici

Central Bank of Turkey ( email )

Ankara, Ankara 06050
Turkey

Mehmet Yorukoglu

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Chicago, IL 60637
United States
773-702-8254 (Phone)

University of Rochester

Rochester, NY 14627
United States

Dubravko Mihaljek (Contact Author)

Bank for International Settlements (BIS) - Monetary and Economic Department ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

Előd Takáts

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Andrew J. Filardo

Bank for International Settlements (BIS) - Monetary and Economic Department ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

Guonan Ma

Bruegel ( email )

Rue de la Charité 33
B-1210 Brussels Belgium
Belgium

Ramon Moreno

Bank for International Settlements (BIS) ( email )

CH-4002 Basel, Basel-Stadt
Switzerland

Agne Subelyte

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Miguel Angel Pesce

Central Bank of Argentina

Reconquista 266
Edificio Central, piso 7
Buenos Aires, 1003
United States

Kevin Cowan

Inter-American Development Bank (IDB) ( email )

1300 New York Avenue NW
Washington, DC 20577
United States
202-623-2607 (Phone)

Carla Valdivia

affiliation not provided to SSRN

No Address Available

Xiaoyi Wang Sr.

Zhejiang University ( email )

38 Zheda Road
Hangzhou, Zhejiang 310058
China

Hernando Vargas H.

Independent

No Address Available

Mojmir Hampl

Czech National Bank (CNB)

Na Prikope 28
CZ-11503 Praha 1
Czech Republic

Michal Skorepa

Institute of Economic Studies ( email )

Opletalova St. 26
Prague, 11000
Czech Republic

Aron Gereben

affiliation not provided to SSRN ( email )

Karvalits Ferenc

affiliation not provided to SSRN ( email )

Zalan Kocsis

Independent ( email )

No Address Available

Subir Gokarn

affiliation not provided to SSRN

No Address Available

Bhupal Singh

Reserve Bank of India ( email )

Mumbai, Maharashtra 400001
India
91-22-25690041 (Phone)

Zvi Eckstein

The Interdisciplinary Center (IDC) ( email )

P. O. Box 167
Herzliya, 69978, PA Pennsylvania 46150
United States
+972 9 9602706 (Phone)
+972 9 9602758 (Fax)

HOME PAGE: http://www1.idc.ac.il/Faculty/Eckstein/index.html

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Amit Friedman

affiliation not provided to SSRN

No Address Available

Sukudhew Singh

Central Bank of Malaysia

Jalan Dato' Onn
P.O. Box 10922
Kuala Lumpur, 50929
Malaysia

José Sidaoui

Bank of Mexico

Av. 5 de Mayo 18
Piso 4
Mexico City, 06059
Mexico

Manuel Ramos-Francia

Banco de México

J. Gabriel Cuadra Garcia

affiliation not provided to SSRN ( email )

Agustin Villar

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Jong H. Kim

affiliation not provided to SSRN ( email )

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