Bank of Japan Governor Masaaki Shirakawa on Tuesday said that it is imperative that each influential economy maintain sufficient exchange rate flexibility.
"Under economic and financial globalization, inflexibility of exchange rates may trigger abrupt changes in international capital flows and increase the burden of monetary and prudential policies," he said while attending the Federal Reserve Bank of San Francisco Conference.
According to the policymaker, the issue of cross-border resolution of globally active financial institutions "is a quite big challenge for policymakers now."
He also noted that global economy would be more vulnerable to shock when it consists of homogeneous countries in terms of economic structure and policy framework than when it is a hybrid system embracing diversity.
by RTT Staff Writer
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