maximum value of the dollar - euro and dollar yen exchange rates was almost 2 : 1. but the large size and the high level of economic development of these economies make them resilient to currency fluctuations, as the exchange of goods, services, and financial assets mostly occurs within each area, while the presence of deep forward and futures markets facilitates currency hedging. this situation contrasts with that prevailing in emerging economies, where policy measures to managing the exchange rate have been the norm. the desire to limit the effects of large swings in exchange rates on the real economy, and the difficulty of insuring against them, were certainly an important reason. but there are other reasons as well. perhaps the most important is that managing exchange rates allowed countries to pursue a strategy of exportled growth. moreover, especially after the asian financial crisis, the wish of building up large precautionary reserves has played an important role. these policies, as we know, favored the building up of the large imbalances between surplus and deficit countries, which provided the economic precondition for the international crisis. in the aftermath of the global crisis timely and internationally coordinated policies were fundamental to avoid a new great depression. crucially, and in sharp contrast with the experience of the 1930 ’ s, there was no large - scale recourse to protectionism or to competitive bis central bankers ’ speeches devaluations. to be sure, an underlying demand for protectionist measures has never been muted, as globalization represents a threat for monopolistic rents, and inevitably increased with the crisis. not surprisingly, during the crisis, 17 of the g20 countries introduced protectionist measures, despite the pledge to avoid them signed in november 2008 by the g20 leaders. however, most of them were very narrow in scope and their impact on the volume of international trade has been negligible. fundamentally, countries are now more aware that they are interdependent through supply chains and imported inputs. moreover, as it often is the case, many protectionist measures, including the so - called “ buy america ” provision, appear to have been circumvented. furthermore, wto agreements now provide greater legal stability for trade relations. the quick recovery of international trade following the end of the great recession owes a lot to the fact that the world has avoided currency and commercial wars. the current situation overall, a cooperative environment prevailed. overtime, however, with the recovery taking ground the situation has somewhat changed. today the danger that

an uncooperative game could gradually gain ground is much more material than only a couple of years ago. a number of features of the present global conditions are behind this risk. first, the recovery is very uneven. this implies that domestic economic policies are confronting very different conditions at home and are thus moved by different, not necessarily consistent, objectives. with the notable exception of germany, economic growth remains feeble in the advanced countries, too slow to help redress seriously weakened fiscal balances and unemployment rates. expansionary policies have exhausted their margins of maneuver. the need to end the exceptional support to the economies provided by fiscal and monetary policies in the last three years is undisputed. absent action, debt sustainability problems and higher global long term interest rates are a certainty. in emerging economies, there are instead signs of overheating, with rising inflation and strong credit creation. some monetary policy tightening has taken place but real interest rates remain very low or even negative in many countries. capital inflows are for many countries back at the high pre - crisis pushed by global monetary and financial conditions that remain very accommodating. monetary authorities are refrained from increasing interest rates further by the fear of spurring larger inflows. as a consequence capital controls and other prudential measures are used, which may provide relief in the short term but also generate distortions over longer periods. second, the recent experience has confirmed that the world has become multi - polar, with emerging markets representing a new pole of autonomous growth. however, we have not yet moved to a multi - polar monetary system. one important reason is that countries are at very different stages of financial development. the demand for advanced economy assets remains very strong and the dollar is still at the center of the system. strong capital flows to emerging economies are natural and even desirable as these economies offer the highest perspective returns, but in many countries they continue to be exceeded by capital outflows into advanced - economy debt, especially into the us. third, macroeconomic imbalances are increasing again after a temporary retrenchment during the crisis mainly due to a depressed demand in deficit countries. they reflect a continuation of the unbalanced pattern of savings across the globe and make the international landscape much more vulnerable to the risks of sudden reversal in market sentiment and risk appetite and / or changes in the interest rate cycle. this situation of the international monetary system is bound to generate suboptimal outcomes and, especially, risks to the