Global monetary policies and implications for financial flows to India and other emerging markets

Abstract

This chapter reviews the experience of monetary easing by the central banks of advanced economies, which included large-scale purchases of financial assets and close to zero or negative policy interest rates, to counter the effects of the Global Financial Crisis (GFC) in 2008–09 and the COVID-19 health crisis in 2020. It then considers the spillover effects of quantitative easing (QE) in the period spanning 2008–2019, as well as the impact of the recent monetary easing related to COVID-19, on developing countries in general and on India in particular. The implications of these developments are examined for private capital flows, exchange rates, and the conduct of monetary and external sector policies during the GFC and post-GFC period and during the COVID-19 health crisis.