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The Quiet Revolution in Emerging-Market Monetary Policy

Although emerging markets are no less at the mercy of advanced economies today than they were in the past, they are benefiting from massive spillover effects in the context of the current crisis. As a result, the ultra-expansionary monetary policies pioneered in advanced economies are now available to almost everyone.

LONDON – Central banking in emerging markets has undergone a quiet revolution during the COVID-19 pandemic. Unlike in past crises, they have been able to mimic what central banks in advanced economies have been implementing: counter-cyclical policies with quantitative easing (QE), local-currency asset purchases, interest-rate cuts, and monetization of government deficits.