The Case for Structural Financial Deglobalization
The strengthening US dollar and rising borrowing costs have left developing and emerging-market countries between a rock and a hard place. To insulate their economies from the greenback’s hegemony, policymakers must shed their illusions about international cooperation and impose constraints on cross-border capital flows.
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PROVIDENCE – The US Federal Reserve’s aggressive monetary-tightening campaign has squeezed economies worldwide, particularly in the developing world. With the dollar appreciating sharply against their currencies, many emerging and developing economies have experienced rapid increases in borrowing costs and consumer prices, leaving local policymakers with little choice but to raise interest rates and imperil their fragile economic recovery.