Toward a Framework for Safeguarding Financial Stability

International Monetary Fund

No 2004/101, IMF Working Papers from International Monetary Fund

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: WP; payments system; economic system; market imperfection; unit of account; financial-system policy; Financial stability; Policy framework; foregone exchange opportunity; financial system performance; market uncertainty; market failure; public goods; market discipline; market confidence; Financial sector stability; Financial stability assessment; Systemic risk; Asset prices (search for similar items in EconPapers)
Pages: 48
Date: 2004-06-01
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Citations: View citations in EconPapers (12)

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