For decades a number of emerging markets have been evolving into advanced economies. They have improved their financial systems, property rights, policy frameworks, and growth models. As it turns out, however, the evolution was going the other way, too: advanced economies were becoming more like emerging markets, too. Debt was accumulating on household, corporate and bank balance sheets. Booms in real estate and parts of the corporate sector added to financial vulnerability. And policymakers were inattentive to the risks or lacked consensus on how to address them...
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Over the past few years, there has been frequent talk about the need for international coordination of monetary policies. In particular, central bankers outside the United States have urged the Federal Reserve to consider the impact of its policies on emerging market economies.
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