It enables emergency liquidity to flow to major financial hubs and, through these hubs, to other markets, thereby contributing to global financial stability. Another measure which would reduce negative spillover effects would be to enhance global safety nets, mostly via the IMF.
A number of instruments which go in this direction have already been created for countries with strong domestic policy frameworks, including such instruments as the IMF’s Flexible Credit Line (FCL) and Precautionary and Liquidity Line (PLL). Improving global safety nets helps to reduce the need for countries to accumulate reserves. Concluding remarks Relationships between Asia and the euro area have strengthened over recent decades.