Central Banking for Financial Stability in Asia
A key lesson of the 2007-2009 global financial crisis (GFC) was the importance of containing systemic financial risk and the need for a "macroprudential" approach to surveillance and regulation that can identify system-wide risks and take appropriate actions to maintain financial stability. By virtue of their broad overview of the economy and the financial system and their responsibility for payments and settlement systems, there is a broad consensus that central banks should play a key role in monitoring and regulating financial stability. Emerging economies face additional challenges because of their underdeveloped financial systems and vulnerability to volatile international capital flows, especially "sudden stops" or reversals of capital inflows. This paper reviews the recent literature on this topic and identifies relevant lessons for central banks, especially those in Asia's emerging economies. Major topics discussed include the debate about the definition of financial stability, the consistency of a financial stability objective with the more traditional and well-established central bank objective of price stability, the appropriate governance structure for coordination of macroprudential policy with other financial supervisors and entities, and the appropriate policy instruments to achieve macroprudential policy objectives, including conventional, unconventional and macroprudential tools. Finally, the report considers issues involved with regional financial regulatory cooperation. Overall, the report concludes that the "lean versus clean" debate has been resolved largely in favor of the former, and that central banks should have a financial stability mandate and the policy tools to successfully pursue that mandate.
Volume (Year): 8 (2012)
Issue (Month): 3 (August)
|Contact details of provider:|| Web page: http://www.mof.go.jp/pri/|
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ben S. Bernanke & Vincent R. Reinhart, 2004. "Conducting Monetary Policy at Very Low Short-Term Interest Rates," American Economic Review, American Economic Association, vol. 94(2), pages 85-90, May.
- Gerlach, Stefan & Peng, Wensheng, 2004.
"Bank Lending and Property Prices in Hong Kong,"
CEPR Discussion Papers
4797, C.E.P.R. Discussion Papers.
- Paul Bloxham & Christopher Kent & Michael Robson, 2011.
"Asset Prices, Credit Growth, Monetary and Other Policies: An Australian Case Study,"
NBER Working Papers
16845, National Bureau of Economic Research, Inc.
- Paul Bloxham & Christopher Kent & Michael Robson, 2010. "Asset Prices, Credit Growth, Monetary and Other Policies: An Australian Case Study," RBA Research Discussion Papers rdp2010-06, Reserve Bank of Australia.
- Claudio Borio & Piti Disyatat, 2010.
"Unconventional Monetary Policies: An Appraisal,"
University of Manchester, vol. 78(s1), pages 53-89, 09.
- Ben S. Bernanke & Mark Gertler, 1999.
"Monetary policy and asset price volatility,"
Proceedings - Economic Policy Symposium - Jackson Hole,
Federal Reserve Bank of Kansas City, pages 77-128.
- Masahiro Kawai & David G. Mayes & Peter Morgan (ed.), 2012. "Implications of the Global Financial Crisis for Financial Reform and Regulation in Asia," Books, Edward Elgar Publishing, number 14483.
- Peter J. Morgan, 2012.
"The Role and Effectiveness of Unconventional Monetary Policy,"
in: Monetary and Currency Policy Management in Asia, chapter 2
Edward Elgar Publishing.
- Morgan, Peter, 2009. "The Role and Effectiveness of Unconventional Monetary Policy," ADBI Working Papers 163, Asian Development Bank Institute.
- Masahiro Kawai & Mario B. Lamberte (ed.), 2010. "Managing Capital Flows," Books, Edward Elgar Publishing, number 13713.
- Masahiro Kawai & Michael Pomerleano, 2012. "Strengthening Systemic Financial Regulation," Chapters, in: Implications of the Global Financial Crisis for Financial Reform and Regulation in Asia, chapter 2 Edward Elgar Publishing.
- Goodfriend, Marvin, 2000.
"Overcoming the Zero Bound on Interest Rate Policy,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 32(4), pages 1007-35, November.
- Garry J. Schinasi, 2004. "Defining Financial Stability," IMF Working Papers 04/187, International Monetary Fund.
- Jean Pisani-Ferry & André Sapir & Nicolas Véron & Guntram B. Wolff, 2012. "What kind of European banking union?," Policy Contributions 731, Bruegel.
- Jonathan David Ostry & Atish R. Ghosh & Karl F Habermeier & Marcos d Chamon & Mahvash S Qureshi & Dennis B. S. Reinhardt, 2010. "Capital Inflows; The Role of Controls," IMF Staff Position Notes 2010/04, International Monetary Fund.
- Masahiro Kawai & Peter J. Morgan & Shinji Takagi (ed.), 2012. "Monetary and Currency Policy Management in Asia," Books, Edward Elgar Publishing, number 14414.
- Jeffrey Carmichael & Michael Pomerleano, 2002. "The Development and Regulation of Non-Bank Financial Institutions," World Bank Publications, The World Bank, number 15236.
When requesting a correction, please mention this item's handle: RePEc:mof:journl:ppr017a. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Policy Research Institute)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.