Reserve Bank of India governor Raghuram Rajan reiterated an interesting idea at an International Monetary Fund conference over the weekend. His notion of an international agreement to monitor the impact of unconventional monetary policies—aired before—comes when they are being increasingly employed by central banks that often seem driven by desperation.
But that points to a dilemma: stressed monetary systems and economies increase the need for international cooperation, but they also often decrease the likelihood of states accepting any constraints on their sovereign right to follow the policies they see fit. The European Union serves as an example of the tensions that can arise in such a situation.
That said, whether Rajan’s proposal is currently implementable or not, it serves as a necessary counterpoint at a time when central banks are testing the boundaries of feasible policy.