International Monetary Fund leader Christine Lagarde said the time for cooperative policy and coordinated international action has come in a world where financial systems are evolving in complexity and interlinkages, Reuters reported Sunday.
Eva Taylor writes Lagarde, speaking at a European Central Bank conference in Portugal over the weekend, urged the world’s central banks to move into a more inclusive stance as a proactive approach against financial crises and their spillback effect onto other economies.
“If policies are viewed only from a national perspective, we may end up in a world of ad hoc intervention, less rebalancing, and the potential to export financial instability,” the IMF managing director told participants of the ECB Forum.
“This would be a world of possibly large welfare losses in many countries, with not just spillover effects from advanced to emerging market economies but also ‘spillbacks,’ feedback effects from emerging market to large advanced economies,” she added.
Lagarde said advanced countries can do their part by promoting stability through transparency in their monetary policies.