The increase in energy prices, for example, contributed on average more than 1 percentage point to overall inflation in 2000 and our main concern was that this should not lead to second-round effects in the domestic economy. Fortunately, this has generally been avoided so far. In contrast to external developments, domestic costs, such as unit labour costs, generally remained subdued in 2000.
This approach should contemplate: (i) for reserve accumulating countries, a move towards flexible exchange rates and a significant reduction of foreign exchange intervention, or the abandonment of their pegs to national currencies; (ii) for reserve issuers, the adoption of a macroeconomic (fiscal) policy framework to sustain credibility of their currencies and the IMS as a whole.