While globalization has affected different countries to varying degrees, it has brought many benefits to the world economy - including increased trade, broader sources of financing, and more rapid diffusion of technology. But globalization has also left countries more exposed to developments beyond their borders. From a central bank perspective, globalization has made the conduct of monetary policy somewhat more challenging.
In order to gauge the prospects for the domestic economy, it is more and more necessary for central bankers to take into account how their economy will be affected by events elsewhere. And of course, central bankers in very large economies must be cognizant of the effects that their actions may have on the global economy and, hence, on their own economy.