Monetary Policy Coordination I The Great Courses Money and Banking: What Everyone Should Know Lecture 35: Monetary Policy Coordination While the reasons that the Dow Jones rises or falls or currencies appreciate or depreciate may be difficult to pinpoint, the fact is that stability or instability in the global economy can often be traced to the coordination—or lack of it—between central banks around the world. In our interconnected world, cooperation between central banks and coordination of monetary policy is essential to success in the global economy. Yet, in spite of the benefits, monetary policy coordination between banks is not always guaranteed. Why? Although coordination by the world’s central banks produces markedly better results than if those banks go their own ways,central bankers may disagree about the importance of various monetary objectives, the actions needed to attain them, and, especially, the timing of corrective action. But the very key to coordination is for banks to simultaneously implement policy to lessen the risks of inflation, recession, changes in exchange rates, or other unfortunate results that can cause much harm to individuals and nations alike. Dr. Salemi is Professor of Economics at The University of North Carolina at Chapel Hill. He has received numerous teaching awards from UNC–Chapel Hill, and has also been recognized nationally with the Bower Medal in Economic Education from the Council for Economic Education and the Villard Award for Research in Economic
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