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Progress and ConfusionThe State of Macroeconomic Policy$
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Olivier Blanchard, Raghuram G. Rajan, Kenneth S. Rogoff, and Lawrence H. Summers

Print publication date: 2016

Print ISBN-13: 9780262034623

Published to MIT Press Scholarship Online: January 2017

DOI: 10.7551/mitpress/9780262034623.001.0001

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PRINTED FROM MIT PRESS SCHOLARSHIP ONLINE (www.mitpress.universitypressscholarship.com). (c) Copyright The MIT Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in MITSO for personal use.date: 20 September 2021

The International Monetary and Financial System: Eliminating the Blind Spot

The International Monetary and Financial System: Eliminating the Blind Spot

Chapter:
(p.245) 24 The International Monetary and Financial System: Eliminating the Blind Spot
Source:
Progress and Confusion
Author(s):

Jaime Caruana

Publisher:
The MIT Press
DOI:10.7551/mitpress/9780262034623.003.0024

The chapter makes the case that there is a blind spot in the international monetary system. The combination of domestically focused policies and global markets does not constrain the buildup of financial imbalances, due to the spillover of liquidity conditions across borders, and makes it hard for national authorities to see these imbalances coming. Central banks should take the international effects on their own actions—international spillovers and feedbacks or “spillbacks”—into account in setting monetary policy.

Keywords:   international monetary system, financial imbalances, spillovers, spillback, liquidity

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