The second way in which an international currency is relevant for monetary policy is its effect on interest rates. In principle, international currency issuers enjoy greater monetary autonomy. Central banks in small open economies, for example, are typically more heavily exposed to foreign spillovers in setting interest rates than those presiding over an internationally dominant currency.
But international currencies are not isolated from foreign spillovers. Greater external demand for euro area securities, for instance, can increase the influence of foreign factors on domestic monetary and financial conditions. [38] Concerns about foreign influences on domestic monetary policy are of course not new.