This paper examines recent developments in the internationalisation of the Chinese yuan, focusing on trade and portfolio flows, foreign exchange markets, cross‑border payments, and official reserve holdings. The promotion of the yuan's global role has been a deliberate policy objective for...

We confront the notion that flexible exchange rates insulate countries from external disturbances with new evidence for the euro area (EA) and 20 of its neighbors. Using high-frequency data, we first establish that countries with flexible exchange rates ("floats") let their currencies depreciate...

We study optimal monetary and exchange rate policy in a small open economy facing oil price shocks. In a model with segmented financial markets that generate endogenous UIP deviations, the first-best allocation is achieved through a combination of interest rate policy and foreign exchange...

In 2025, fragile and conflict-affected (FCS) included 38 economies that are home to 1 billion people. The recent shocks have intensified fragility-related pressures even in more stable economies. This paper provides a comprehensive discussion of macroeconomic challenges and policies under...

This article introduces OPENSIMPLEST, a highly parsimonious stock-flow consistent (SFC) model of an open economy. The model is designed as a pedagogical and analytical benchmark that preserves the core mechanisms of more complex open-economy SFC frameworks while remaining complete, transparent,...

The traditional approach to monetary policy, which relied on one instrument to achieve a single goal, has proven ineffective during recent periods of global instability. In response to the challenges that this traditional framework could not address, non-standard monetary policy instruments have...

This paper analyzes the unanalized topic in macroeconomic (monetary) politics, which is the emergence of the currency crisis as a consequence of targeting inflation. Many central banks adopted inflation targeting under a pressure from the IMF. Sudden depreciation of exchange rate which results...

This paper uses a multi-methodological approach to measure the fiscal costs of monetary and exchange rate policy distortions in Zimbabwe. It identifies three channels through which these policy distortions affect tax revenue: the Olivera-Tanzi Effect (inflation-related tax payment lags), an...

In July 1991, India began to dismantle its long-standing, highly restrictive import control regime and move toward a more open economy. How were policymakers able to dislodge and replace an entrenched system with powerful vested interests behind it? Standard explanations for policy change -...

This report provides an overview of the technical assistance provided by the International Monetary Fund (IMF) to the Banco de la República to support the authorities in reviewing the regulatory framework and formulating development strategies for the foreign exchange market

Recently, there has been increasing research interest in the historical composition of central bank reserves. However, studies in this area is hindered by a lack of data, as such data spanning multiple centuries is only available for a small number of countries. This paper presents an empirical...

This paper explores a development strategy for peripheral economies by advocating for a paradigm shift from traditional economic models that rely on accumulating foreign reserves. It proposes the job guarantee (JG) policy, an automatic stabilizer based on a reserve pool of employed individuals,...

Modern monetary theory argues that all governments that issue their own currency have the same policy space. The present paper argues that this position is wrong. For it to be valid, abstraction must be made from the gravitational force of the US dollar that stems from its backing mass of...

The article analyzes why exchange rate stability has been prioritized in Mexico and why the national currency has appreciated; which policies and factors have made this possible, the costs and consequences of the strong peso, and its sustainability and temporality are also examined. Mexico's...

Central banks around the world routinely engage in asset purchases in secondary markets as part of implementing monetary policy or enhancing market liquidity, but the effects of such interventions are not yet fully understood. We develop a multi-asset general equilibrium model in which the...

Post-Keynesian conflict inflation models have received renewed attention in the course of the recent inflationary processes related to the recovery from the Covid-19 crisis in 2020 and the hike of energy prices in the context of the start of the Russian war on Ukraine in 2022. Although the basic...

This paper explores the central role of monetary governance, i.e., high politics and low politics, in protecting a currency's exchange rate and reducing its volatility during periods of global crisis. Using annual panel data from 15 developed and emerging economies between 2001 and 2023, and...

Lebanon's longstanding fixed exchange rate regime collapsed in the wake of the country's 2019 financial crisis. This paper examines the underlying causes of the collapse, offering a new policy framework based on a floating exchange rate system and detailing its superior qualities. However, the...

This study evaluates the effectiveness of the Chiang Mai Initiative Multilateralization (CMIM) in safeguarding financial stability among members of the Association of Southeast Asian Nations (ASEAN) plus Japan, the People's Republic of China, and the Republic of Korea-particularly in response to...

In recent years, Albania has experienced a sustained appreciation of the domestic currency. This raises the questions of what factors are driving this appreciation and how to calibrate appropriate policy responses. Drawing on insights provided by the IMF's integrated policy framework (IPF), this...

The study participates in adding a new term to the monetary policy literature which is the alignment of monetary policies between foreign countries and the Federal Reserve Bank's policy. This study aims to examine the effect of the of the monetary policy alignment in foreign countries with the...

This paper investigates the impact of repatriated export proceeds on exchange rate volatility in Indonesia. By applying a time-varying parameter vector autoregression (TVP-VAR) model with stochastic volatility, we assess whether the impact of repatriated export proceeds can dampen the effect of...

Central banks increasingly act as market-makers-of-last-resort, yet the impact and exit of such interventions remain poorly understood. Using euro-area data, we analyze the cycle of market freeze, intervention, and exit in short-term debt markets. A run on money market funds (MMFs) triggered a...

Compared to 2020, the deficit in merchandise goods trade with China is 3.6 times higher for Germany in 2025 (annualised based on data from January to April 2025) and it has doubled for the Euro area. However, the nominal exchange rate of the Yuan against the Euro has hardly changed between 2020...

Central banks increasingly act as market-makers-of-last-resort, yet the impact and exit of such interventions remain poorly understood. Using euro-area data, we analyze the cycle of market freeze, intervention, and exit in short-term debt markets. A run on money market funds (MMFs) triggered a...

In 1960, South Korea's exports were about 1 percent of GDP, and its ability to import depended almost entirely on U.S. aid. After changing its foreign exchange policies in the mid-1960s, Korea's exports surged to more than 10 percent of GDP by the end of the decade. This paper explores the...

We delve into Venezuela's 2018-2019 hyperinflation episode to examine the policy constraints autocratic governments face during extreme economic distress. We develop a simple model that reflects dynamics in a segmented foreign exchange (FX) market and allows us to understand how media coverage...

I estimate how monetary policy affects the exchange rate in Norway using a local projection instrumental variables (LP-IV) framework with high-frequency monetary policy surprises as instruments. I find that a surprise increase in the Norwegian policy interest rate leads to an immediate...

This paper explores the intricate relationship between profit rates, exchange rates, and terms of trade in the Brazilian economy from 2000 to 2023. Building on Weisskopf's (1979) decomposition of the profit rate, we demonstrate how exchange rates and terms of trade affect profit share, the...

How can a currency achieve more widespread international use? We study the internationalization of the Chinese renminbi (RMB) through the lens of a unique policy experiment in Argentina. In 2023, amid a severe dollar shortage, Argentina expanded a currency swap line with the People's Bank of...