DAVOS, Switzerland, Jan 24 (Reuters) - Countries across the world need to unwind expansive monetary policies and put more emphasis on reforming and repairing their economies, the head of the Bank for International Settlements (BIS) told Reuters.
Jaime Caruana, head of the BIS - known as "the central banks' central bank" - said the outlook for the global economy had brightened and policymakers should seize the chance this afforded them to shape up their economies to lift productivity.
"We need to continue to normalize monetary policy and put more attention on the other side of the policy equation, that is, reforms and repairs," Caruana said in an interview at the World Economic Forum in Davos, Switzerland.
Advanced economies "are doing better" and emerging markets would continue to grow, he said, "though perhaps not with the same dynamism as in the past few years".
"It's a better outlook," he said of the global economy. "I think these tailwinds that we seem to have could be used to advance what we think are the critical elements for achieving sustainable and balanced growth: reforms and repairs."
He called for structural reforms and bank balance sheet repairs.
The U.S. Federal Reserve's decision in December to scale back its massive monetary stimulus will dominate the unwinding of expansive monetary policies around the world this year.
First signals from the Fed last May that it would begin to scale back - or taper - its extraordinary economic stimulus measures prompted many investors to pull funds out of emerging markets seen as risky, hitting asset values.
A new global flight from emerging market assets gathered pace on Friday, sending the Turkish lira to a record low and setting global shares on course for their worst week this year.
"We tend to think it would be normal that there is some volatility and that the process of normalization should not be unduly affected by this volatility in markets," Caruana said in the interview, conducted on Thursday for release on Friday.
"At the global level, the level of monetary policy accommodation is quite high and that doesn't seem to be a situation consistent with lasting monetary and financial stability."
Unwinding expansive monetary policies would likely be more complicated in the future than now, he said: "We should not assume that next year it will be easier."
Turning to the banking sector, Caruana addressed the issue of leverage ratios on which regulators are split, with some in continental Europe favouring sticking with the preliminary ratio of 3 percent while the United States, Britain and emerging markets want a higher level of 4 percent or more.
"Now we'll have the same leverage ratio definition and structure on both sides of the Atlantic. But the numbers have not been fixed," he said. "There will be a process for determining the proper calibration. Calibration and final tweaks will be done before mid-2017."
(Writing by Paul Carrel; Editing by John Stonestreet)