In December, the BIS highlighted the “uneasy calm” in financial markets in its Quarterly Review. As author entered 2016, the uneasy calm gave way to quite a turbulent start to the year in the financial markets. The global economy now finds itself at the centre of three major economic developments. The first is disappointing growth and downward revisions of projections, especially in emerging economies; the second is the large shifts in exchange rates, again especially for emerging market currencies against the US dollar; and the third is the sharp fall in commodity prices, hitting a number of commodity-exporting countries particularly hard, but at the same time providing a positive dividend to other economies. These three developments may appear unconnected at first sight. Indeed, there has been a tendency in recent commentaries on the global economy to see them as exogenous “shocks” that have come out of the blue, and as external “headwinds” buffeting the domestic economy against which domestic monetary and fiscal policy have to lean. However, when we take a step back and take in the larger picture, it becomes clear that these developments are connected; they share common factors. Rather than being separate exogenous “shocks”, they are manifestations of a major realignment of economic and financial forces associated with the long-anticipated shift of global monetary forces. As such, recent developments are a part of a longer movie, which requires a longer-term, global perspective to spot the vulnerabilities facing financial markets and the global economy. Author would like to explore some aspects of this long-term perspective that emphasise commonalities, in a stylised and therefore oversimplified way […]