On the principles of monetary policy The fundamental principles of monetary policy were formed and bolstered in the debates between theoretical economists and practising central bankers, which had lasted for a decade and which are now the subject of a broad consensus worldwide.
Elevated inflows of foreign capital can present challenges in circumstances where prudential oversight and control of financial markets are not fully developed. Thus, countries such as Brazil worried that heavy capital inflows could lead to an undesirable loosening of credit conditions and leave the economy vulnerable to rapid reversals. In the past two years, we have seen these concerns play out in reverse.