The paper also argues that for emerging market economies that are interested in seeing some international use of their currencies, offshore markets can help increase the recognition and acceptance of the currency while still allowing the authorities to retain a measure of control over the pace of the capital account liberalisation. The development of offshore markets could pose risks to monetary and financial stability in the home economy which needs to be prudently managed. The experience of the Federal Reserve and of the authorities of the other major reserve currency economies in dealing with the Euromarkets shows that policy options are available for managing such risks.
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