Coping with a Complex Global Environment: a Brazilian perspective on emerging market issues.

This policy paper reviews the rationale for emerging market economies adopting macroprudential policies in an unstable global environment. Monetary policy in these economies is discussed with reference to its complex interaction with global events and spillovers. In particular, the paper describes and discusses macroprudential and monetary policies adopted in Brazil in 2009-10. The paper also reviews the market turbulences caused by the fiscal limit problem in some advanced economies in 2011-12 and explores its consequences for emerging market economies, in particular for Brazil, highlighting the role of macroprudential measures under such circumstances. Global coordination issues are also addressed from an emerging market point of view. Commodity prices, inflation and growth prospects for emerging markets will be discussed as well under a complex and volatile global liquidity environment.