Browsing: aggressive investors

Countries must continue to work to mitigate their vulnerabilities over time. This involves minimizing balance-sheet misalignments, establishing money and foreign exchange markets, and lowering exchange rate passthrough by increasing monetary policy credibility.

However, in the short term—while vulnerabilities remain high—the use of extra instruments may assist relieve short-term policy trade-offs when certain shocks occur. In particular, foreign exchange intervention, macroprudential policy measures, and capital flow controls may help increase monetary and fiscal policy autonomy, promote financial and price stability, and minimize output volatility if reserves are enough and these instruments are available.