They are often the result of a laborious process of experimentation, negotiation and responses to pressure. This pressure can come from lobby groups or vested interests that do not necessarily have the interests of the broader society at heart. Pressure can also come from crises. When faced with a crisis, countries have to be bold and proactive to restore confidence.
Thus, to attain lower financing costs along the yield curve, a solid macroeconomic framework is required, with fiscal sustainability, price stability, and a resilient financial sector. Regarding monetary policy instruments, asset purchase programs should not be considered “over-the-counter” measures in emerging markets. Policy makers need to be mindful that central bank financing to governments can fall into a situation of fiscal dominance.