Abstract
The global financial crisis which began in 2007 has induced a wealth of research on financial stability. Many open issues remain, but a useful framework from which to draw lessons from the crisis has been developed by Stanley Fischer. It assesses the role of monetary policy at the zero interest lower bound, macroprudential supervision and exchange-rate management for the preservation of financial stability. It furthermore assigns important functions to central banks in dealing with bubbles and in fulfilling the role of lender of last resort.
This introduction takes up Fischer’s “lessons” in order to put the contributions in this volume into perspective and to draw tentative conclusions on the state of financial stability in East Asia: while there are no signs that a financial crisis is imminent, the task of preserving stability remains nonetheless arduous.
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Notes
- 1.
Fischer (2012, pp. 1–16).
- 2.
More than 10 years ago, Bernanke et al. (2004) provided evidence that monetary policy even has options at the zero bound.
- 3.
- 4.
- 5.
- 6.
For a discussion on adjusting monetary countermeasures, see Bean et al. (2010).
- 7.
Calvo and Reinhart (2002) have shown that exchange rate management remained important even after the Asian financial crisis, when countries claimed to have abandoned it.
- 8.
This monetary policy conclusion may be the most controversial of Fischer’s lessons. Other authors plead for a return to a rule-based monetary policy; see, for example, Taylor (2010).
- 9.
- 10.
This conclusion may also be drawn from Lo’s illuminating review of key literature about the global financial crisis: Lo (2012).
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Rövekamp, F., Bälz, M., Hilpert, H.G. (2015). Introduction: Financial Stability in East Asia—A Tentative Assessment. In: Rövekamp, F., Bälz, M., Hilpert, H. (eds) Central Banking and Financial Stability in East Asia. Financial and Monetary Policy Studies, vol 40. Springer, Cham. https://doi.org/10.1007/978-3-319-17380-1_1
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