Thus, authorities in emerging markets might continue relying on fiscal policy, minimum reserve requirements and other administrative measures to contain inflationary pressures. But irrespective of the more cyclical challenges the system is currently facing, there are some arguments suggesting that tensions between price and exchange rate stability might become more fundamental.
Accordingly, the medium-term perspectives of the global monetary system are likely to be determined by two opposing forces (Bordo and James 2006). On the one hand, reflecting the ideas of the more traditional optimum currency area theory, some observers argue that, with emerging markets’ rapid integration, the global economy will face a growing need for a common monetary standard.