"International policy cooperation was relatively straightforward at the height of the Global Financial Crisis when stimulative domestic macroeconomic policies were necessary for stabilizing both domestic and global demand and financial markets. But, international cooperation has become more complicated because economies now require different levels of stimulus. Every time a step forward is taken (e.g., a recognition of the potential harm from spillover effects of monetary policy), one or two steps back are also taken (e.g., lack of progress on IMF voting rules, weakening of the role of macro surveillance).

A major threat to the global economy is monetary policy uncertainty in advanced economies, most notably in the United States, where the Federal Reserve seems unable to find an easy exit out of the current combination of ultra-low interest rates and quantitative easing. Even though US data is far from being dire, each time the stock market wiggles the Fed appears to hedge the timing of the exit. At the same time, forward guidance appears to have lost its appeal and actually risks becoming a source of financial volatility. Emerging market economies, India and Brazil in particular, have expressed dissent regarding the effects of accommodative monetary policies on world growth. As the recovery prolongs, disagreement about the way forward is intensifying and the progress in policy cooperation achieved in the early phases of the crisis is slowly being undone, most notably within the G20.

As discussions among central bankers concerning secular stagnation and low wage growth become more frequent, their role in fostering global growth and cooperation is being obscured. This type of outlook seems far from central bankers’ usual remit, making it unclear whether monetary policy can do much more than it has so far.

Despite the importance of international policy coherence in fostering a stronger and more stable global recovery, it is likely that substantial progress in macroeconomic and international monetary cooperation will stall until the next large crisis strikes.."

"A positive assessment of progress in financial regulation is based on progress in response to the Libor scandal, planned improvements to the CDS market, and initial evidence that Dodd-Frank is working, at least partially. However, there is plenty more to do."