A plethora of literature on central banking emphasizes the importance of credibility in shaping monetary policy and in guiding the market. Credibility too is important for effective regulation. It is notable that even in everyday personal relationships, credibility is built on established competence and character. On consistency. On integrity. On good self governance.
In going through the global financial crisis recently, we have realized that all economies are highly interconnected, and that advanced and emerging market economies are no longer separate but now in the same boat.