At the same time, emerging economies, especially in Asia, endowed with the memory of recent currency crises, had started to build up foreign exchange reserves, partly driven by the desire to hedge against the volatility of international capital flows. What was necessary for this accumulation of reserves were large and persistent current account surpluses, i.e.
The Federal Reserve’s recent monetary policy decisions The framework I have outlined here can be useful in understanding the rationale for the recent decisions of the Federal Reserve and our policy approach going forward.