Moreover, given the extent of financial market integration and the particular features of international financial markets at present, financial volatility in EMEs may be widely transmitted even in the absence of crisis or near-crisis episodes.
In other words, policy makers in AEs need to carefully consider not only the consequences of their policy decisions on EMEs, but also the risk of spillbacks from EMEs as a result of policy actions in AEs. The implications for international policy cooperation are evident. 8