These differences are perfectly consistent with the spirit and letter of the proposal, and reflect the particular characteristics of the U.S. banking system and the rules and regulations under which it operates. While our approach is best for the United States, it is not necessarily best for other nations.
There are, however, also circumstances under which inflation differentials are a cause for concern within a monetary union. Let us consider the case of a country where domestic demand has long been growing strongly, pushing real GDP at or above its potential. A further stimulus to domestic demand may then tend to generate upward pressure on domestic costs and prices.