Global Shocks and Risk to Financial Stability in Asia
Genberg, Hans | April 2017
Abstract
Asian emerging market economies have recovered relatively well from the Great Recession of 2008-2009. Emerging Asia has been quite successful in maintaining both macroeconomic and financial stability in a turbulent global environment. Policy frameworks and governance structures have been adapted based on lessons learned from the Asian Financial Crisis. In general, policy makers have not been shy to adopt an eclectic approach to achieving monetary and financial stability using more than a single policy instruments to reach their objectives. Interventions in the foreign exchange markets are used in many jurisdictions to limit currency volatility, short-term interest rates are aimed at attaining macroeconomic stability interpreted mainly, but not exclusively, as price stability, and macroprudential policies have been employed in attempts to reduce the risk of financial stability.
The use of multiple instruments to reach multiple goals is not without risk, however. At a minimum it requires coordination among the entities that are responsible for each instrument, which in turn necessitates proper governance both within the central bank and between the central bank and other agencies that may be involved. Including a wider set of objectives than price stability in the tasks assigned to central banks also raises questions about the ability of the central bank to reach these objectives while avoiding the pitfalls associated with trying to do so.
Citation
Genberg, Hans. 2017. Global Shocks and Risk to Financial Stability in Asia. © Asian Development Bank Institute. http://hdl.handle.net/11540/7061.Keywords
International Financial Market
Multilateral Financial Institutions
Economic Recession
Market
Crisis
Economic indicators
Growth models
Gross domestic product
Macroeconomics
Economic forecast
Financial Stability
Financial Management System
Financial Restructuring
Capital Market Development
Market Development
Economics
Erosion
International Economics
Macroeconomic
Macroeconomic Analysis
Performance Evaluation
Impact Evaluation
Business recessions
Multilateral development banks
Regulatory reform
Capital
Exports
Economic development projects
Economic policy
Economic forecasting
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