How should such differences be addressed? This is where the interplay between financial integration and monetary policy comes in. Monetary policy is not well suited to cater for asymmetric shocks, which affect some countries more than others. In a monetary union, banks or other financial intermediaries may also prove unable to absorb country-specific shocks, if they are themselves overly exposed to their respective economy.
But as networks, collaboration is also often required. The development of the NPP and recent work on addressing fraud in card payment systems are good examples of where participants that are normally competitors have cooperated to ultimately deliver better outcomes for Australian consumers and merchants. These collaborative efforts, however, are not without their challenges.