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The Microeconomic Dimension of Monetary Policy


  • Delano Villanueva


This paper which touches on the links between the macroeconomic and microeconomic dimensions of monetary management, argues that bank soundness is a sine quo non of price stability (or exchange rate stability), and vice versa. It then describes the structural weaknesses of a banking system that create conditions for a financial crisis. The paper concludes by describing how official oversight can buttress market discipline, given some externalities inherent in the banking industry and the public goods nature of banking soundness.

Suggested Citation

  • Delano Villanueva, 1997. "The Microeconomic Dimension of Monetary Policy," Staff Papers, South East Asian Central Banks (SEACEN) Research and Training Centre, number sp59, April.
  • Handle: RePEc:sea:spaper:sp59

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    Cited by:

    1. Delano S. Villanueva, "undated". "Challenges for Inflation Targeting," Working Papers wp10, South East Asian Central Banks (SEACEN) Research and Training Centre.

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