financial stability by themselves in such a scenario could be self - defeating. a key element is to get the appropriate policy mix : a tighter fiscal policy, to reduce the financing needs of the government and to control the current account deficit, could be combined with a moderately tighter monetary policy, so as to contain capital outflows and protect economic growth. let me conclude with the following thought : the imf estimated recently that 2 / 3 of spread compression in emes is explained by external factors. these external factors are reverting. if emes want to preserve such spread compression, they should : – first, reinforce their macroeconomic fundamentals, keeping the central bank focused on keeping inflation on track and playing a leading role in the design and implementation of macroprudential policies ; assuring the sustainability of its debt, and upgrading the regulatory and supervisory regime in the financial sector, and second, – proceed with structural reforms to enhance competitiveness and growth and at the same reduce the correlation with the world ’ s business cycle. thank you very much. bis central bankers ’ speeches

june, p. 92. bis central bankers ’ speeches in this case, one cannot rule out interruption in normalization or even a return to greater stimulus in the united states. second, continued orderly unwinding of lax monetary policy, including eventually smaller central bank balance sheets, could prove to be complicated. third, the prevalence of the dollar as a safe - haven currency could weaken the credit channel through which loose monetary policy works in other economies. fourth, given diminishing returns from accommodation, further attempts at easing could damage the credibility of monetary policy. and finally, the tendency toward cyclical convergence could lead to the re - synchronization of monetary policies at some point. in this context, the panorama for emerging economies could deteriorate significantly. divergence is already reflected in portfolio adjustments and asset prices. however, as new information on monetary stances in advanced countries becomes available, new changes may ensue. in this regard, only surprises would carry weight. possible effects could include more portfolio re - composition, decompression of interest rate term premiums, as well as further currency depreciations. the most adverse effects will likely be concentrated in those countries viewed as suffering from financial imbalances and fragile economic fundamentals. thus, policymakers should focus on correcting deficiencies and solidifying strengths, including sound fiscal stances, opportune monetary policy actions, and the implementation of structural changes to foster long - term productivity growth. concluding remarks incipient monetary divergence has sparked concerns for market players as the current begins to shift slowly away from unprecedented monetary expansion. advanced economies face an arduous task in managing the withdrawal of extraordinary stimulus, however gradual it may be. in particular, historically unequaled use of unconventional monetary tools makes it hard to know just how this scenario will eventually unfold. until now, negative financial impacts on emerging markets from the beginning of this new phase have been relatively moderate. at the same time, however, the real positive expected effect of the u. s. economic recovery has not yet materialized. this is due in part to factors such as severely diminished oil prices. given all the uncertainties in the present context, the outlook for emerging economies could easily deteriorate, and thus they should concentrate on fortifying their fundamentals as never before. bis central bankers ’ speeches graph 1 advanced economies : cyclical component of gdp1 % deviation from the trend united states japan united kingdom germany - 1 - 2 * 2016 -