Safeguarding Financial Stability: Theory and Practice

Books, December 12, 2005

Source details

How is finance related to economic processes, and why should it be viewed as a public good requiring policy action? This book provides an answer.
The book develops a practical framework for safeguarding financial stability, which encompasses both prevention and resolution of problems.
It examines on-going and future challenges to financial stability posed by globalization, a growing reliance on derivatives and their markets, and the capital market activities of insurers and reinsurers.

Practical framework for safeguarding financial stability covering:
- Prevention of financial disturbances.
- Resolution of financial problems when they occur.
Emphasis on viewing finance as a public good that warrants policy intervention.
Focus areas include financial regulation and supervision, market discipline, and financial sector policy and analysis.

Globalization as a source of on-going and future challenges to financial stability.
Growing reliance on derivatives and their markets.
Capital market activities of insurers and reinsurers and their implications for stability.
Related sectors and concepts addressed: Credit, Credit risk, Financial institutions, Financial markets, Insurance companies, Money, and market imperfections.

Policies should balance prevention and resolution capabilities to safeguard financial stability.
Regulation and supervision need to account for cross-border/globalized financial linkages.
Oversight of derivative markets and capital market activities of insurers and reinsurers is necessary to mitigate systemic risk.
Market discipline and measures addressing market imperfection are relevant components of the overall policy approach.

Safeguarding Financial Stability: Theory and Practice; December 12, 2005
- Safeguarding Financial Stability: Theory and Practice; December 12, 2005 (Markdown version)
- Safeguarding Financial Stability: Theory and Practice; December 12, 2005 (PDF)