There is much talk, particularly in America, of a New Era in economics -- of rapid growth, no cycles and price stability. While something important and beneficial does seem to be happening in the United States, we need to separate out what is possible from the wishful thinking.
As we saw in the global financial crisis a decade ago, and in the Asian Financial Crisis about two decades ago, global or regional financial integration did affect domestic financial stability in many countries. While financial integration facilitates consumption smoothing and diversification of risks across countries, large and volatile capital flows carry risks for global financial stability.