The first PEO (Pacific Economic Outlook) Structure group meeting of the year on monetary policy regimes took place in Osaka, Japan, during March 17-18, 2012, hosted by the Japan committee for PEO. Following the previous topic of Macrofinancial Linkages and Financial Deepening, this project is to scrutinize monetary policy regimes and their effects on macroeconomic performance in advanced and emerging economies in the Pacific region. In the context of advanced economies, rule-based monetary policies represented by inflation targeting have been pursued and spread among them. But they failed to prevent the global asset market bubble bursts. In emerging and developing economies, giving up virtual dollar peg exchange rate systems, they have been recommended to adopt another nominal anchor, i.e. inflation targeting with flexible exchange rates and freer capital movement. But they are now confronted by volatile international financial flows and exchange rate risks, which may impact their long-term growth paths in a non-negligible way.

With the continued global economic downturns, we are witnessing small and large scale shocks on banking sectors and securities markets of both developed and emerging market economies.  The aim of the project is to examine the degree of resilience of the regional financial architecture to the crisis. Following agenda will be covered throughout the two-year project:

1. The recent financial crisis has seriously affected domestic financial systems and macroeconomic developments in the region. How well or not have the policy authorities coped with the situation? 
2. Based on the above assessment, should we or not change the framework of monetary policy management or monetary policy regimes in terms of monetary policy independence, exchange rate stability and capital mobility? If so, how; if not, why not?
3. How will be the regional financial cooperation be affected and what can be done to strengthen it?

Please refer to the program agenda and contact JANCPEC for more information:

Japan Committee for Pacific Economic Outlook
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