Toward a Framework for Safeguarding Financial Stability
48 Pages Posted: 15 Feb 2006
Date Written: June 2004
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: Suggested Citation