Why is such a potential setback in global openness to trade so worrisome? Naturally, the complexities of the trade and financial networks and interlinkages embedded in the global production framework, give rise to a multiplicity of channels through which higher tariffs and other protectionist measures can affect the world economy.
This enforced monetary financing of war debts triggered the first severe crisis of the Latin monetary union and fuelled a permanent mistrust between the member states. The recent past – notably the financial crisis – also has important lessons for monetary policy. One example is asymmetrical monetary policy, which provides strong counter-measures when speculative bubbles burst. This can inflate the risks for financial stability.