Bernanke argued Sunday that those policies are not to be blamed for trouble in emerging markets.
“It is not at all clear that accommodative policies in advanced economies impose net costs on emerging market economies,” the Fed chief said during a speech in Tokyo, Japan.
Bernanke said that capital flows are influenced by many factors, and changes cannot be attributed wholesale to the monetary policy choices of developed economies. Instead, policymakers in the developing world have great influence over capital flows, Bernanke said.
Bernanke then went further, saying that the systematic devaluation of currencies in some emerging markets have made those countries more susceptible to inflation risk.
“The perceived advantages of undervaluation and the problem of unwanted capital inflows must be understood as a package — you can’t have one without the other,” Bernanke said.
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