-  If we intervene to stem appreciation, but do not sterilize, resultant liquidity will lead to inflation and asset price bubbles which can disrupt financial stability. BIS central bankers’ speeches  3  -  If we sterilize the liquidity, interest rates go up attracting more flows. A classic case of Dutch Disease. -  There is really no benign option.
(iii)  Contrary to popular stereotype view, real effective exchange rates of EMEs have indeed appreciated since the 2008 crisis. (iv)  AEs must be more sensitive to the spillover impact of their policies. -  The burden of adjustment must be shared. Arguments of Advanced Economies (i)  QE is driven by entirely domestic macroeconomic consideration of stimulating demand.