In this context, one should always remember that monetary policy credibility, – which is of utmost importance for the stable value of money – is hard won. It can, however, be easily lost, leading to longterm negative repercussions for the overall performance of an economy. References Deutsche Bundesbank, Monetary Policy Transparency, Monthly Report, March 2000.
Not too long ago, Japan was perceived in a similar way to how China is perceived now: a country that was on the way to becoming the dominating economic power. However, this perception changed rather quickly after the bubble burst and Japan entered what is now labelled the “lost decade”. That is not to say that the two countries are similar.