International coordination of unconventional monetary policy The intense debates over cross-border spillovers of unconventional monetary policy during the crisis naturally elicited calls for global coordination of monetary policy to avoid beggarthy-neighbor actions that could undermine growth globally. Recognizing the practical limitations of such proposals, in 2013, the Group of Seven (G-7) instead adopted a more circumscribed but achievable set of commitments.
Each member committed that its monetary policy settings – unconventional as well as conventional – would be oriented to meeting its “respective domestic objectives using domestic instruments,” and “not target[ing] exchange rates.” 6 This agreement ensured that actions in the major advanced economies would be designed to provide accommodation targeted to supporting domestic demand, which would in turn support global demand – in contrast to classical demand-sapping beggar-thy-neighbor policies designed to shift demand by weakening the exchange rate.