gave rise to a significant appreciation of real exchange rates and a rapid expansion of credit, including through the shadow banking system, in many emes, thus increasing their vulnerability. second, the “ taper tantrum ” episode of 2013 provides further evidence on the significance that spillovers from shifts in monetary policy in the advanced economies, even when they are only perceived and do not actually occur, can have on emerging markets. expectations of an unwinding of the unconventional monetary policy implemented in the united states led to a strong market reaction during that period. consequently, financial volatility rose sharply and capital flows to emes fell, leading to pressures on the exchange rates and asset prices in these economies, increased external risk premia, and in general a severe tightening of financial conditions. some authors have stressed the significance of financial market turmoil during may - august 2013, despite the relatively small decrease in capital flows to emes ( about 1 % of gdp ). 4 it is of course natural to ask to what extent the above experiences are applicable to the current situation. in other words, is the normalization of monetary policy in the us likely to have a major impact on emes? here we have divergent views. on the one hand, there are those who believe that the outlook for emerging market economies is not as gloomy as it seems : • the upcoming tightening cycle will most likely take place within the context of a firmly established recovery in the united states, which is a scenario that has seen emerging market economies thrive in the past. as a reference, some estimates point out that, over the year following the beginning of the last three tightening cycles in the united states, industrial production in emerging markets grew between 7. 5 % and 10 %, while export volumes did so by some 10 % to 15 %. 5 all in all, the argument see sahay, r. et al. ( 2014 ) : “ emerging market volatility : lessons from the taper tantrum ”, imf staff discussion note no. 14 / 09, september. see dahlhaus, t. and g. vasishtha ( 2014 ) : “ the impact of u. s. monetary policy normalization on capital flows to emerging - market economies ”, bank of canada working paper 2014 – 53, december. see musalem, alberto g. ( 2015 ) : “ us macroeconomic and regulatory developments and emerging market economies ”, speech at the international financial conference annual meeting, cartagena, colombia, 9

is the most important contribution the federal reserve can make to the global economy, and that this is precisely the focus of monetary policy in this country. 10 they have also stressed the need for effective communication to limit the risk of surprises and the possibility of abrupt market responses. i have no quarrel with these arguments, and i believe there is widespread recognition of the major efforts undertaken by the fed to increase transparency and communication in recent years. however, i see room for further action from advanced economies in at least three areas. first, unconventional monetary policies, though fundamental to overcome the global financial crisis and underpin the recovery of demand in recent years, provide only a temporary stimulus to economic activity. ensuring adequate and sustained rates of growth implies the adoption of measures focused on enhancing efficiency and productivity that go well beyond the reach of monetary policy. indeed, there is a lot that advanced economies still need to do to meet these needs. second, actions taken by major central banks have important consequences for other economies which deserve careful consideration. yet, an adequate understanding of such spillovers is still lacking. although literature on the subject is scant and definitive conclusions are difficult to arrive at, to have an idea of the challenges we are facing, it may be useful to note that recent research carried out at the bis concludes that us quantitative easing has see, among others, sahay, r. et al. ( 2014 ) : “ emerging market volatility : lessons from the taper tantrum ”, imf staff discussion note no. 14 / 09, september ; world bank ( 2015 ) : “ hoping for the best, preparing for the worst : risks around u. s. rate liftoff and policy options ”, special feature 1 in global economic prospects, june ; eichengreen, barry and poonam gupta ( 2014 ) : “ tapering talk : the impact of expectations of reduced federal reserve security purchases on emerging markets ”, policy research working paper no. 6754, the world bank, january ; and international monetary fund ( 2013 ) : “ taper talks : what to expect when the united states is tightening ”, box 1. 1 in world economic outlook, october. see for instance dudley, william, op. cit. and fischer, stanley ( 2015 ) : “ the federal reserve and the global economy ”, remarks at the conference held in honor of professor haim ben - shahar, tel aviv, israel, 26 may. bis central bankers ’ speeches had a greater impact on emerging market