This latest round of monetary tightening in China reflects the authorities growing concern over liquidity. In 2009, M2 money supply (a key indicator used to forecast inflation) increased by 27 year on year, and credit expanded by 34 .

This latest round of monetary tightening in China reflects the authorities growing concern over liquidity.

The Monetary Cosmopolitans

And, though monetary tightening may well be advisable in some economies, it might be inappropriate in others.

The objectives of the new monetary policy approach are admirable.

Meanwhile, those who argued that monetary policy would not suffice turned out to have been right.

But it s easy for politicians to be irresponsible about monetary policy.

The ECB s supervisory role will be fully separated from its monetary policy responsibilities.

One argument emphasizes the links between fiscal and monetary policy.

Short term consumer price stability does not guarantee economic, financial, or monetary stability.

Although the euro simplifies trade, it creates significant problems for monetary policy.

Yet the evidence indicates that QE is no free lunch.

The regional economy would benefit from closer coordination of exchange rate and monetary policies.

The ECB has never claimed that its strategy is the ultimate solution to the challenges monetary policy is confronted with.

But it is important to remember that asset purchases are not an end in themselves. They are an instrument, not a target, of monetary policy.

In the short run, the eurozone needs much looser monetary and fiscal policy.

ZURICH Over the last two decades, inflation targeting has become the predominant monetary policy framework.

That task does not differ from monetary policy and can be delegated to an independent body.

This has been a spectacular improvement over the monetary rules of the past.

This is not the type of volatile monetary policy that Europe wants or needs.

There has been surprisingly little comparative analysis of the effects of quantitative easing (QE) in Japan, the US, and Britain.

A new era of active and varied monetary policy may have begun, with potential benefits for all.

So that is the situation that the Fed now faces as it considers normalizing monetary policy.

The absolute price of any good is determined by monetary policy, in a way largely independent of the structure of relative prices.

Among emerging economies, China could face a hard landing by late 2014 if critical structural reforms are postponed, and the other BRICs need to turn away from state capitalism.

In Britain, economic growth is even slower, while inflation is much higher. And these countries QE has also fueled asset bubbles in the world economy.

The eurozone and the UK remain mired in recessions made worse by tight monetary and fiscal policies.

And these countries QE has also fueled asset bubbles in the world economy.

But its composition is different from that of the MPC, so its view on a particular policy stance may be different as well, and here, too, the governor has only one vote.

This undermines the potency of monetary policy notwithstanding bold and imaginative efforts by the Bank of Japan to inject liquidity into the economy.

That is true of both monetary and fiscal policy the two mainstays of modern countercyclical stabilization.

The experience of the Great Depression led Keynes and his more orthodox successors to greatly underestimate the role and influence of monetary policy.

The first option, a sharp weakening of the euro, is unlikely, as Germany is strong and the ECB is not aggressively easing monetary policy.

First, in the absence of a single global central banking authority, a modicum of monetary policy coordination among major economies is required.

Central bankers in Europe have always resented the narrow monetary policy mandate given to the ECB under the Maastricht Treaty.

The old adage that an ounce of prevention is worth a pound of cure applies with particular force to monetary policy.

WASHINGTON, DC Not long ago, the separation of financial supervision and monetary policy was in vogue in many countries.

But including monetary analysis in a monetary policy strategy is vital to the central bank s decision making process.

It was the crisis of the European Monetary System that drove the euro s launch on January 1, 1999.

There is a consensus, for instance, on sound fiscal and monetary policies no one wants to return to the hyperinflation of earlier decades.

There is also the risk of policy mistakes by the US Federal Reserve as it exits monetary easing.

It does not take into account the financial cycle, and thus produces excessively expansionary and asymmetric monetary policy.

Even when the frequent appearance of asset price bubbles was acknowledged, most believed that efforts to detect and prick them at an early stage would be impossible and potentially harmful.

In this highly uncertain environment, monetary policy decisions which did not rely on a solid framework could have been misguided.

In order to get economies back on track, QE is a useful step, but only as part of a larger package of measures.