6  BIS Review 105/2010  managing the capital account?” has shifted from a qualified “no” pre-crisis to a qualified “yes” post-crisis. Question 5: Has fiscal dominance of monetary policy ended? 37. The answer before the crisis was “hopefully”.
That judgement is being revisited amidst apprehensions that the extraordinary fiscal expansion by the advanced economies to combat the crisis is actually mutating into structural fiscal deficits and that monetary policy will have no choice but to accommodate continued elevated government borrowing into the medium term.