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Taming the global financial cycle: Central banks and the sterilisation of capital flows in the first era of globalisation

Guillaume Bazot, Eric Monnet, Matthias Morys, «Taming the global financial cycle: Central banks and the sterilisation of capital flows in the first era of globalisation», VoxEU, 2 November

Countries wish to reap the benefits of financial integration while shielding themselves from the vagaries of international financial markets. Can they have it both ways? A large body of work acknowledges the constraints of a trilemma, pointing out that a fixed-exchange rate regime and capital account openness lead countries to give up monetary autonomy.

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