* U.S. official wants better system of global liquidity
* Response to series of selloffs in emerging markets (Adds background on policy, effects; more quotes)
NEW YORK, March 27 (Reuters) - While explicit policy coordination among the world's central banks is unfeasible, a more effective system should be developed to ensure they have access to foreign currency reserves in times of stress, a top U.S. Federal Reserve official said on Thursday.
"Monetary policy meant to suit everybody is likely in the end to suit nobody," William Dudley, the influential head of the New York Fed, said in a speech that pushed back against criticism that aggressive U.S. policy accommodation has recklessly hurt emerging-market economies.
Last spring, when Fed officials started discussing the prospect of reducing their bond-buying stimulus, the currencies and stocks of many emerging markets sold off sharply. The selloff returned in countries like Turkey and Argentina earlier this year once the Fed began trimming the purchases.
As emerging markets reeled in January, for instance, Reserve Bank of India Governor Raghuram Rajan said the U.S. should pay more attention to the rest of the world, and that policymakers should "do what is right, rather than what is just right given the circumstances of their own country."
The Fed however has continued to trim the stimulus and plans to finally raise interest rates some time next year.
The hyper-accommodative U.S. policies were meant to depress yields, and have since the 2007-2009 recession driven investors to seek higher returns in riskier markets. Now that the policies are being wound down, that tide of investment has turned.
AREAS FOR IMPROVEMENT
Dudley stressed that central banks need to tailor polices to the needs of their domestic economies. And while the Fed in particular could be more cognizant of the effects its decisions have on the rest of the world, he warned "explicit coordination looks neither feasible nor desirable."
Earlier on Thursday, St. Louis Fed President James Bullard said there is little to be gained by international policy coordination, but flagged "room for debate" on the issue.
Dudley said however that one area to be improved is central banks' need for emergency access to large foreign exchange reserves, especially U.S. dollars, when capital starts to abandon a given economy.
"We could design a better global solution of collective insurance - access to liquid resources in times of stress that were not stigmatized and that could and would be used to facilitate adjustment," Dudley, the effective No. 2 policymaker at the Fed next to Chair Janet Yellen, said according to prepared remarks at an internal New York Fed event.
"This could help reduce market volatility and dampen the size of foreign exchange and other adjustments."
The current system, Dudley added, is "inefficient and often ineffective" because the holdings are expensive and any central bank that dips into those reserves sends a negative signal to financial markets. (Reporting by Jonathan Spicer; Editing by Meredith Mazzilli)