Five years after the fall, policy makers seemingly continue to believe that the severity of any crisis-led downturn can be divorced from its source. There is too little appreciation that earlier international monetary systems required cooperation precisely because exchange rate systems rendered economies dependent on collaboration between the participants. This paper argues that credibility and trust in any new international regulatory framework must first begin at home with a determination for fiscal and monetary policies to work in harmony. This includes cooperation, if not coordination, of regulatory and supervisory functions to ensure that macroprudential policies effectively complement domestic monetary policy and provide an additional tool to implement a sound macroeconomic framework that will soften the blow from the next financial crisis.

Part of Series

CIGI Papers present in-depth analysis and discussion on governance-related subjects. They include policy papers that present CIGI experts' positions or contributions to policy debates, and background papers that contain research findings, insights and data that contribute to the development of policy positions.
  • Pierre Siklos is a CIGI senior fellow. His research interests include applied time series analysis and monetary policy, with a focus on inflation and financial markets.