Central Banking for Financial Stability in Asia, Asian Development Bank Institute Working Paper Series No. 377, Masahiro Kawai and Peter J. Morgan, August 2012
“A key lesson of the 20072009 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 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 Asias emerging economies.”
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