Recent Experience of International Monetary Policy Cooperation

Abstract

The large disequilibriums in major countries’ balances of payments and the sharp exchange rate shifts in the past few years have been an increasing challenge to governments and central banks given declining growth dynamism in the economies of the industrial countries. The need for greater cooperation must be seen in the light of increasing integration of economies: there are a growing internationalisation and liberalisation of the financial markets on the one hand, and the relatively tenuous obligations of the actors in an international monetary system with flexible exchange rates on the other. In view of the fact that individual countries are continuing to pursue economic and monetary policies on their own account, this cooperation may serve to avoid inconsistencies in the economic policies of individual countries and to facilitate their coordination. International monetary policy cooperation is designed to alleviate the tensions between domestic and external objectives in individual countries. Ultimately, internally consistent and internationally compatible economic and monetary policies are to be made possible.