Interest rates are one of the major determinants of economic policies of countries because they govern borrowing and investment. They should be internationally harmonised to help low developed countries to also benefit from their exports and improve their economic systems

The best approach, dear Dariusz Prokopowicz , may lie in a balance between local responsiveness and international coordination. Central banks could set interest rates informed by domestic conditions while also considering international economic indicators and agreements. This hybrid approach could facilitate both national growth and international stability, allowing countries to navigate their economic challenges while remaining mindful of their roles in the global economy.

Allowing countries to set their own interest rates can enable them to respond flexibly to domestic economic conditions, fostering stability and growth suited to their unique situations. Nationally tailored policies can help countries respond more effectively to local crises, such as banking problems, high inflation, or recessions that require quick and decisive monetary action.

In an increasingly globalized economy, economic shocks in one country can quickly affect others. A harmonized approach can promote stability and prevent localized issues from escalating into global crises. During global economic downturns, coordinated interest rate policies can enhance the effectiveness of monetary policy and provide a unified approach to tackle shared challenges. Harmonizing interest rates can help mitigate risks associated with currency fluctuations, making international transactions smoother and more reliable.

Buena pregunta a lo que pienso que esto depende del grado de integración económica y financiera entre países. Por ejemplo:

• En bloques económicos con fuerte integración (como la Eurozona), una política monetaria armonizada tiene sentido.
• En economías más independientes y diversificadas, una política nacional más flexible es generalmente preferible.

The question of how interest rates should be managed—whether by individual countries or through international agreements—presents a real dilemma. On one hand, letting each nation set its own rates allows them to address their unique economic problems, like high unemployment or rising prices, more directly. This also means they maintain control over their economy. However, in today's world, economies are deeply connected. What one country does affects others. Working together on interest rates can help avoid problems like sudden shifts in money flow between countries or unfair competition through currency manipulation. Yet, getting everyone to agree and stick to a common plan is hard, especially when their economies are in very different situations. Most central banks try to find a middle ground, focusing on their own country's needs but also paying attention to what's happening globally. The degree of cooperation tends to increase when countries are more economically intertwined, like those sharing a currency.

The ideal approach might depend on the balance between preserving the flexibility to address national circumstances while leveraging collaboration to tackle global economic interdependencies. What’s interesting is that technology and globalization are continuously nudging us toward collaboration, while politics and nationalism often remind us of the importance of autonomy. It creates this dynamic tension, which makes the discussion so fascinating. If I were to approach this from an observational standpoint, I would vote for an "hybrid model."

Nations might prioritize their sovereignty for matters that directly impact their domestic economies, like inflation, employment, and financial stability. However, there could be coordinated efforts on issues that transcend borders, such as managing global financial crises, stabilizing exchange rates, or tackling shared economic goals like climate financing.

The world seems to be evolving into a more interconnected system, so leaning toward greater economic unity could amplify collective strength. However, any push for harmonization would need to respect cultural, political, and economic diversity, which adds layers of complexity to global cooperation.

Interest rate policy should ideally strike a balance between national and international considerations. Nationally oriented policies are crucial for addressing domestic economic conditions, such as inflation and unemployment. However, international harmonization is increasingly important in a globalized economy, as interest rate changes in one country can impact exchange rates, trade, and capital flows. Ideally, central banks should coordinate policies to avoid conflicts, but national priorities should remain the primary focus.

Dear Researchers, Scientists, Friends,

The research question concerning the dilemma between tailoring interest rate policy to the domestic situation and harmonizing it within international financial agreements is extremely complex and relevant in the context of global economic interdependence. The presented text aptly illustrates this dilemma, pointing to the benefits of an autonomous response to local economic conditions and the stabilizing effect of harmonization on the financial system. However, it is worth expanding this discussion to include new research questions, such as the analysis of optimal mechanisms for coordinating monetary policy between countries with different economic characteristics, the study of the impact of international capital flows on the effectiveness of autonomous interest rate policy, the analysis of the role of international financial institutions in shaping national monetary decisions, as well as the implications of the growing importance of central bank digital currencies (CBDCs) for the international harmonization of monetary policy. Future research could also focus on identifying the conditions under which monetary policy autonomy becomes more or less desirable from the perspective of macroeconomic and financial stability. I sincerely thank everyone for their past contributions to this important debate. I am open to scientific cooperation in this crucial area and invite you to continue this significant discussion, which is of fundamental importance for shaping a stable and effective global financial system.

Best regards,

Dariusz Prokopowicz

Interest rate policy should remain primarily nationally oriented to respond to country-specific economic conditions, though some degree of international coordination is beneficial in a globalized economy to avoid spillover effects, capital flight, and currency imbalances.

National orientation allows better alignment with local conditions, but harmonization (e.g., in EU) prevents destabilizing capital flows. A hybrid approach may be optimal.

Interest-rate policy must primarily respond to national macro conditions (inflation, employment), but open economies face spillovers from global rates and exchange-rate considerations; practical policy combines national objectives with awareness of cross-border effects and coordination where exchange-rate and financial-stability spillovers are large.