And the shift towards a multipolar world is in turn reflected in changes to global institutions and fora, as evidenced by the switch in relative importance between the G7 and the G20, and the ongoing governance reforms at the IMF. In line with the shift in economic centre of gravity, the currency constellation in the IMS may also be gradually changing. In particular in light of the remarkable growth of China’s economy and recent policy measures adopted by its authorities, the international use of the renminbi has gained momentum.4 And China’s plans to liberalise its capital account as well as to increase exchange rate flexibility and develop domestic financial markets will enhance the role of the renminbi as an international reserve currency. Some analysts believe that, over time, it can reach international currency status, alongside the US dollar and the euro.5 We would then enter an era of a tri-polar IMS. Unconventional monetary policy Before the global financial crisis the widespread adoption of explicit price stability objectives had been conducive to prolonged low inflation outcomes alongside economic growth. Major central banks were content to invoke the Tinbergen principle, aiming to achieve their primary objective of price stability through a single monetary policy instrument: short-term interest rates. The global financial crisis changed this setting abruptly. Pursuing central bank mandates in a zero lower-bound environment has meant that monetary policy needed to broaden the set of policy instruments at its disposal, including forward guidance and asset purchases by central banks.
After the global financial crisis the correlation rose sharply to 0.6 for the euro area and 0.75 for non-euro area OECD countries. 2  See Ivashina, V., Scharfstein, D.S., Stein J.C. (2012), “Dollar Funding and the Lending Behavior of Global Banks”, NBER Working Paper No 18528, November. 3  See Bank for International Settlements (2014), “EME Banking Systems and regional financial integration”, CGFS Papers, No 51. BIS central bankers’ speeches  1  cross-border liquidity flows or the US rules for foreign banking organisations may be seen as examples. Such a “de-globalisation” scenario, if confirmed, could become self-validating and have profound effects on the degree of international risk-sharing, spillovers and the global allocation of savings, and therefore on global long-term growth. Shifting economic centre of gravity Since the early 2000s the world has also witnessed impressive growth rates in emerging economies, which have exceeded those in the advanced world. In particular the BRICS (Brazil, Russia, India, China and South Africa) have more than doubled their share of global GDP from less than 10% in 2000 to 21% in 2013; similarly, other low and middle-income economies have seen their share increase from 7% in 2000 to 12% in 2013. The rise of emerging economies is also illustrated by the eastward shift of the world’s economic centre of gravity, which is occurring at a faster speed than ever before in human history.