Central Banking for Financial Stability in Asia

Posted: 2 Sep 2012

Date Written: August 31, 2012

Abstract

A key lesson of the 2007-2009 global financial crisis 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 Asia’s emerging economies.

Keywords: central banking, central banks, financial stability, Asia, surveillance and regulation, global financial crisis

JEL Classification: E52, F31, G28

Suggested Citation

Kawai, Masahiro and Morgan, Peter J., Central Banking for Financial Stability in Asia (August 31, 2012). ADBI Working Paper 377, Available at SSRN: https://ssrn.com/abstract=2139344 or http://dx.doi.org/10.2139/ssrn.2139344

Masahiro Kawai (Contact Author)

Asian Development Bank Institute ( email )

Kasumigaseki Building 8F 3-2-5
Kasumigaseki Chiyoda-ku
Tokyo, 100-6008
Japan

Peter J. Morgan

ADBI ( email )

Kasumigaseki Building 8F 3-2-5
Kasumigaseki, Chiyoda-ku
Tokyo, 100-6008
Japan

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