Based on Europe’s long experience of monetary cooperation – which started in the 1970s precisely in order to address the challenges of global currency instability for a group of closely integrated countries – it is worth recalling that progress in such matters often stems from a fruitful  BIS Review 87/2009  21  tension between a leadership role taken by one or two countries and an unremitting effort to design arrangements and institutions that are balanced (if not always symmetric) and flexible enough to accommodate the needs of all participants.
Within domestic demand, monetary policy was picked on by the survey as being responsible but increased government spending and public consumption from the export earnings, both important factors contributing to strong domestic demand, were not clearly emphasized. Also, very importantly, the kina appreciated against the US and Australian dollars and the prices of fuel and food declined in the second half of 2008.