Thread by @ChinaFinance40

Central banks should further coordinate and cooperate to tackle challenges brought by the rise of digital currencies, impact of cross-border capital flows, and spillover effects of monetary policy of one country, said former #PBOC governor Zhou Xiaochuan: mp.weixin.qq.com/s/rzlaDJqp4GjZ…

Most digital currencies were initially designed to address weaknesses in global financial infrastructure, especially in cross-border payments, but they have also brought challenges associated with proper management and the role central banks.

One example of spillover effects of an individual country’s monetary policy on other countries is the quantitative easing policy introduced by the US Fed to fight the GFC and its subsequent cycle of rate hikes which has now given way to a cycle of rate cuts.

IMF has reconsidered its stance on capital flow management since GFC in the face of more frequent cross-border trade and investment amid increasing global connectivity, and growing dependence of some emerging economies on the U.S. dollar.

Also, as multilateralism is facing challenges due to trade friction, among other problems, throughout the globe, there is still a long way to go for central bans’ coordination and cooperation.