##s in financial markets and seldom perform the shock absorption role that is central to traditional macroeconomic analysis. gabaix and maggiori ( 2015 ). “ international liquidity and exchange rate dynamics ”, quarterly journal of economics, 1369 - 140. [ 6 ] “ implications of usd dominance on capital flows and financial stability in emes ”, special feature 1, mas ’ financial stability review, dec 2020. [ 7 ] williams j, ( 2016 ), “ measuring the natural rate of interest : international trends and determinants ”, journal of international economics 108, s59 - s75 [ 8 ] finger et al ( 2019 ), “ facing the tides : managing capital flows in asia ”, imf asia and pacific department paper series no. 19 / 17. other studies find that some central banks ’ monetary policy space has been eroded by capital flows even under floating rate regimes. rey ( 2016 ), “ international channels of transmission of monetary policy and the mundellian trilemma ”, nber working paper series, working paper 21852 ; and miranda - agrippino and rey ( 2020 ), “ us monetary policy and the global financial cycle ”, review of economic studies, volume 87, issue 6, november 2020. [ 9 ] mano, r and sgherri, s ( 2020 ), “ one shock, many policy responses ”, imf working paper, wp / 20 / 10. [ 10 ] menon, r ( 2014 ), " getting in all the cracks or targeting the cracks? securing financial stability in the post - crisis era, " opening remarks at the asian monetary policy forum, 24 may. © 2021, government of singapore.

and financial imbalances, thus mitigating financial stability risks. however, and this is a point i have made elsewhere, monetary policy is too blunt an instrument for addressing specific risks to financial stability, and it can sometimes cause collateral damage to the rest of the economy if it tries to do so. an integrated policy framework could perhaps shed light on the circumstances under which monetary policy could also serve financial stability objectives, and whether there are benefits to jointly calibrating monetary policy and macroprudential policy, as well as how this calibration should be done. the bis and imf have both been undertaking research on these issues. central bankers have at the same time gained considerable experience in employing an eclectic mix of policy instruments, with varying degrees of success. there is merit in bringing these practical experiences to bear in formulating an integrated policy framework. conclusion developing [UNK] policy instruments and using them in a coherent fashion will enhance macroeconomic and macro - financial stability. it will help to make financial globalisation safer, especially for emes, at a time when there are growing risks of fragmentation in international economic relationships. your task is therefore vital. i wish you a fruitful conference ahead. [ 1 ] imf balance of payments, imf international financial statistics, mas calculations. [ 2 ] fratzscher, m., lo duca, m. and straub, r. ( 2013 ), “ on the international spillovers of us quantitative easing ”, ecb working paper no. 1557 ; bhattarai, chatterjee, and park ( 2017 ), “ global spillover [UNK] of us uncertainty ”, fed reserve bank of dallas, working paper no. 331 ; eichengreen and gupta ( 2014 ), “ tapering talk : the impact of expectations of reduced federal reserve security purchases on emes ”, world bank working paper, no. 6754. [ 3 ] volatility of capital flows in emes rose from an average usd 1. 2 billion in 2006 - 2008 to usd 2. 1 billion in 2009 - 2011 based on a 12 - month rolling standard deviation of gdp - weighted capital flows. [ 4 ] while economies tend to experience additional capital inflows in response to exchange rate appreciation, these inflows could create additional appreciation pressures on the exchange rate. ehlers and takats ( 2013 ), “ capital flow dynamics and fx intervention ”, bis papers no. 73. [ 5 ] exchange rates are sensitive to imbalance