The international monetary and financial system: eliminating the blind spot

Panel remarks by Mr Jaime Caruana, General Manager of the BIS, at the IMF conference "Rethinking macro policy III: progress or confusion?", Washington DC, 16 April 2015.

The present-day international monetary and financial system does not constrain the build-up of financial imbalances within and across countries. Liquidity conditions often spill over across borders and can amplify domestic imbalances to the point of instability. The rules today are mainly local, even though the game has become global. To help eliminate this blind spot, central banks should enhance domestic policies by taking financial stability considerations into account, internalise the interactions among policies, and strengthen international cooperation so as to establish better rules of the game.