Macroprudential Policies and the COVID-19 Pandemic: Risks and Challenges for Emerging Markets: A Discussion

Eswar Prasad

Chapter 7 in Macro-financial Stability Policy in a Globalised World: Lessons from International Experience:Selected Papers from the Asian Monetary Policy Forum 2021 Special Edition and MAS-BIS Conference, 2023, pp 121-127 from World Scientific Publishing Co. Pte. Ltd.

Abstract: This chapter by Professor Sebastian Edwards provides a convincing and compelling narrative about how emerging market economies (EMEs) have used regulatory forbearance on macroprudential policies, as well as modifications of some aspects of these policies, to help their economies buffer the impact of the pandemic and assist in their subsequent recoveries. The chapter contains a detailed listing of the various types of actions taken by central banks and other regulatory agencies in the group of 12 diverse countries included in the sample. It shows how in every one of these countries regulatory authorities actively used macroprudential policies as a policy tool operating in tandem with monetary and fiscal policies to limit financial and economic damage from the pandemic. The study also has an interesting forward-looking element. Edwards notes that new financial technologies, especially central bank digital currencies (CBDCs) issued by major central banks, could complicate the conduct of regulatory policies in EMEs…

Keywords: Macro-financial Policy; Policy Framework; Macroprudential Policy; Monetary Policy; Fiscal Policy; Capital Flow Management Measure; Capital Control; Foreign Exchange Intervention; Integrated Policies; Multiple Policies; Policy Trade-off; Policy Substitute; Policy Complement; Policy Interaction; Policy Space; Central Bank; International Spillovers; Spillbacks; Sending Country; Receiving Country; Financial Channel; Financial Regulation; Financial Stability; External Stability; Advanced Economy; Emerging Market Economy; Capital Flow; Portfolio Flow; Banking Flow; Exchange Rate; Banking System; Non-bank Financial Institution; United Kingdom; Sweden; China; Hong Kong Sar; India; Indonesia; Korea; Singapore; Latin America; Croatia (search for similar items in EconPapers)
JEL-codes: E E52 E58 E6 F F01 F3 F38 (search for similar items in EconPapers)
Date: 2023
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