Second, although conditions vary from country to country, on the whole, EMEs exhibit greater resilience than they did in prior decades, reflecting, among other factors, more flexible exchange rates, greater stocks of international reserves, stronger fiscal positions, and better regulated and more conservatively managed banking systems.
EMEs have policy tools to help manage any negative externalities that may arise, and recent developments provide additional rationale for them to redouble their efforts to bolster their resiliency.13 Reducing vulnerabilities, improving policy frameworks, and safeguarding the financial sector will go a long way toward making EMEs more robust to a wide range of shocks, not just those that may arise from changes in monetary policy in the advanced economies.