Financial Safety Nets for Asia
The impending reversal of the Federal Reserve’s expansionary monetary policy carries serious downside risks for emerging Asian economies. In order to minimize the spillover effects of US monetary policy, these countries should boost their reliance on currency-swap arrangements to strengthen their financial safety nets.
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SEOUL – Emerging economies are facing significant uncertainty and serious downside risks. One major source of instability is the looming reversal of the US Federal Reserve’s expansionary monetary policy – the prospect of which is generating volatility in global financial markets and threatening to disrupt emerging-economy growth.