Toward a Framework for Safeguarding Financial Stability

48 Pages Posted: 15 Feb 2006

See all articles by Jan Kakes

Jan Kakes

De Nederlandsche Bank - Monetary and Economic Policy Department

Garry J. Schinasi

Independent Advisor, Global Financial Stability

Date Written: June 2004

Abstract

This paper examines the emergence of financial stability as a key policy objective. It discusses the underlying trends in the financial system, as well as the role of finance in relation to money, the real economy, and public policy. Financial stability is defined in terms of its ability to help the economic system allocate resources, manage risks, and absorb shocks. Moreover, financial stability is considered a continuum, changeable over time and consistent with multiple combinations of its constituent elements. On the basis of these concepts, a framework is presented that comprises an encompassing analysis and assessment of financial stability, and maps out broad policy implications.

Keywords: Financial stability, Policy framework

JEL Classification: E60, G00

Suggested Citation

Kakes, Jan and Schinasi, Garry J., Toward a Framework for Safeguarding Financial Stability (June 2004). IMF Working Paper, Vol. , pp. 1-48, 2004. Available at SSRN: https://ssrn.com/abstract=878925

Jan Kakes

De Nederlandsche Bank - Monetary and Economic Policy Department ( email )

Westeinde 1
1017 ZN Amsterdam
Netherlands

Garry J. Schinasi

Independent Advisor, Global Financial Stability ( email )

Washington, 20008
+1-202-361-0958 (Phone)

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