Module 48 : Monetary Management in an Open Economy

Monetary management in an open economy is vital for stability, growth, and managing global financial system challenges. This paper explores objectives, tools, exchange rate regimes, capital flow impact, policy coordination, and central bank role. It examines managing challenges like volatile capital flows, balancing inflation and exchange rate fluctuations, and reconciling domestic and external objectives. Central banks ensure independence, accountability, coordinate with fiscal policy, and use effective communication strategies. Understanding these dynamics helps policymakers and researchers develop strategies for enhanced monetary management, stability, and growth in open economies.