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Securing financial stability through macroprudential measures

Author

Listed:
  • Daniel Jeongdae Lee

    (Macroeconomic Policy and Financing for Development Division, United Nations Economic and Social Commission for Asia and the Pacific)

  • Jose Antonio Pedrosa-Garcia

    (Macroeconomic Policy and Financing for Development Division, United Nations Economic and Social Commission for Asia and the Pacific)

  • Kiatkanid Pongpanich

    () (Macroeconomic Policy and Financing for Development Division, United Nations Economic and Social Commission for Asia and the Pacific)

Abstract

While financial stability is not an explicit objective for most central banks, it is clearly an issue of concern given its implications for the real economy. Given the current environment of relatively robust economic growth and benign inflation, central banks and other relevant authorities should focus especially on aspects of financial stability. This is particularly urgent for countries suffering from high or rapidly rising household debt and corporate leverage, as well as those suffering from distressed bank loans. Macroprudential measures complement monetary policy in securing financial stability. In view of the high degree of interconnectedness among financial institutions, a shock can spread rapidly across the entire system. Hence, there has been growing consensus that financial regulation should move from a "micro" approach based on individual institutions towards a "macro" framework. Macroprudential measures are aimed at reducing systemic risks and safeguarding the stability of the financial system as a whole, as opposed to microprudential measures which are targeted at specific segments or even institutions

Suggested Citation

  • Daniel Jeongdae Lee & Jose Antonio Pedrosa-Garcia & Kiatkanid Pongpanich, 2018. "Securing financial stability through macroprudential measures," MPDD Policy Briefs PB64, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
  • Handle: RePEc:unt:pbmpdd:pb64
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