Private Finance and Public Policy

July 1, 2004

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Format: Chicago

Garry J. Schinasi Private Finance and Public Policy, (USA: International Monetary Fund, 2004) accessed October 6, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper articulates a logical foundation-drawn from disparate literatures-for understanding why safeguarding financial stability is an important economic policy objective. The paper also explains why private aspects of finance provide broader social economic benefits and have the characteristics of public goods. Unique aspects of finance are examined, as are the linkages between finance, money, and the real economy. Sources of market imperfections in finance are identified and their implications are analyzed. The arguments imply that reaping the full private and social economic benefits of finance requires both private-collective and public-policy involvement as well as a delicate balance between maximizing the benefits of positive externalities (and public goods) and minimizing the costs (including potential instabilities) of other sources of market imperfections in finance.

Subject: Asset and liability management, Banking, Consumption, Financial institutions, Financial sector policy and analysis, Financial sector stability, Liquidity, Loans, National accounts, Purchasing power

Keywords: Consumption, Economic system, Finance, Financial risk, Financial sector stability, Financial Stability, Global, Liquidity, Loans, Market Failures, Market forces, Market imperfection, Medium of exchange, Money, Public goods, Purchasing power, Store of value, WP

Publication Details

Pages:

43
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2004/120
Stock No:

WPIEA1202004
ISBN:

9781451854305
ISSN:

1018-5941

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