5  Concluding Remarks In conclusion, we believe that unconventional forward guidance is not an ideal policy tool for emerging market and small open economies, where exit strategies must be sought more frequently. Insufficient central bank credibility and a potentially larger impact on fiscal dominance, debt sustainability, and currency depreciation make unconventional forward guidance a far riskier option than in advanced economies.
However, considering the possibility of facing secular stagnation due to fast aging in the future, emerging markets do not have the luxury of giving up QE and forward guidance completely. They had better start to build up a better policy framework, such as scenarios-based conventional forward guidance.