Central Banking for Financial Stability in Asia
ï»¿A key lesson of the 2007â€“2009 global financial crisis (GFC) was the importance of containing systemic financial risk and the need for a â€œmacroprudentialâ€ approach to surveillance and regulation that can identify system-wide risks and take appropriate actions to maintain financial stability. By virtue of their 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 â€œsudden stopsâ€ or reversals of capital inflows. This paper reviews the recent literature on this topic and identifies relevant lessons for central banks, especially those in Asiaâ€™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 paper considers issues involved with regional financial regulatory cooperation. Overall, the report concludes that the â€œlean versus cleanâ€ 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.
|Date of creation:||Aug 2012|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.eaber.org
More information through EDIRC
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.:
- Jonathan David Ostry & Atish R. Ghosh & Karl Friedrich Habermeier & Marcos Chamon & Mahvash Saeed Qureshi & Dennis B. S. Reinhardt, 2010. "Capital Inflows; The Role of Controls," IMF Staff Position Notes 2010/04, International Monetary Fund.
- 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, 2009.
"Unconventional monetary policies: an appraisal,"
BIS Working Papers
292, Bank for International Settlements.
- Peter J. Morgan, 2012.
"The Role and Effectiveness of Unconventional Monetary Policy,"
in: Monetary and Currency Policy Management in Asia, chapter 2
- Morgan, Peter, 2009. "The Role and Effectiveness of Unconventional Monetary Policy," ADBI Working Papers 163, Asian Development Bank Institute.
- Jean Pisani-Ferry & AndrÃ© Sapir & Nicolas VÃ©ron & Guntram B. Wolff, 2012. "What kind of European banking union?," Policy Contributions 731, Bruegel.
- Stefan Gerlach & Wensheng Peng, 2003.
"Bank Lending and Property Prices in Hong Kong,"
122003, Hong Kong Institute for Monetary Research.
- Masahiro Kawai & Peter J. Morgan & Shinji Takagi (ed.), 2012. "Monetary and Currency Policy Management in Asia," Books, Edward Elgar, number 14414, December.
- Jeffrey Carmichael & Michael Pomerleano, 2002. "The Development and Regulation of Non-Bank Financial Institutions," World Bank Publications, The World Bank, number 15236.
- 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.
- Masahiro Kawai & Mario B. Lamberte (ed.), 2010. "Managing Capital Flows," Books, Edward Elgar, number 13713, December.
- Garry J. Schinasi, 2004. "Defining Financial Stability," IMF Working Papers 04/187, International Monetary Fund.
- Ben 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, number 14483, December.
- Marvin Goodfriend, 2000.
"Overcoming the zero bound on interest rate policy,"
Conference Series ; [Proceedings],
Federal Reserve Bank of Boston, pages 1007-1057.
When requesting a correction, please mention this item's handle: RePEc:eab:macroe:23328. 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: (Shiro Armstrong)
If references are entirely missing, you can add them using this form.