New Financial Product and Challenges for Central Banks
New financial products (NFP) are often defined as the emergence of new financial instruments in more sophisticated and developed financial markets. In the development of more complete markets, the existence of new financial products can improve resource allocation, thereby supporting longer term growth prospects. In more advanced markets, the existence of new financial products appear to reduce growth volatility, allow firms to have a more flexible financial structure and households to have smoother consumption in the face of temporary changes in their income. However, financial innovations pose new challenges for central bankers as they can make monetary analysis more complex by modifying the monetary policy transmission mechanism, and in some cases even endanger financial stability. The global financial crisis has demonstrated its potential risks to the markets and poses challenges for central banks. In view of this, central banks need to track the trade mechanisms of new financial products and their roles in the financial markets. Central banks need to closely coordinate policies on new financial products and share information with the other financial authorities, based upon its understanding of trades in new financial product and their linkage effects.
|This book is provided by South East Asian Central Banks (SEACEN) Research and Training Centre in its series Research Studies with number rp86 and published in 2012.|
|Contact details of provider:|| Postal: Level 5, Sasana Kijang, Bank Negara Malaysia, 2 Jalan Dato? Onn, 50480 Kuala Lumpur|
Phone: 603-9195 1888
Fax: 603-9195 1801
Web page: http://edirc.repec.org/data/seacemy.html
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:sea:rstudy:rp86. 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: (Yunyee)
If references are entirely missing, you can add them using this form.