Future Central Banking In Emerging Market Economies

This paper elaborates the theoretical and practical perspectives of future central bank policy in emerging market economies (EMEs). With salient thoughts presented to expand broader horizons, a special overview is presented on the experiences and practices of central bank policies in EMEs. For EME central banks, complex challenges are inevitable considering the current state of economic progress, economic endowments, and institutional capacity. Several theoretical assumptions that underlie policy thinking are also substantively not the case for EMEs. These conditions, however, provide broad opportunities and space for central banks in EME countries to deliver policy innovations and breakthroughs, not only from a practical level, but also a theoretical perspective. The implementation of flexible inflation targeting framework (ITF) and the central bank policy mix, as well as the policy trilemma management of an open economy are among many examples of how central bank policy has evolved towards a more integrated framework. Eventually, to become a relevant regulator, the central bank must put extra effort into strengthening policy coordination and institutional arrangements, fostering new sources of growth to support a broader scope of welfare amelioration, while reinforcing the central bank policy mix in the new era