Despite their own sound fundamentals, meanwhile, emerging market economies – or EMEs in short – have become the hostages of cross-border linkages, both real and financial, as they have faced weak and highly uncertain external demand, sharp reversals in capital flows, and heightened foreign exchange market pressures.
As you may have noticed here, and as I should highlight now, there have thus been two types of linkages at the heart of the postcrisis economic and financial developments – real-financial linkages, and cross-border linkages. And the implication is thus that a global solution is necessary if we hope to return to a sustainable path of growth and financial stability.