Active use of exchange rate intervention or capital controls, however, risks reinforcing this second-best argument for such market intervention by distorting market incentives and inhibiting the development of financial markets and institutions that are best suited to mitigate these risks.
These guidelines have the aim to further align the working procedures of the colleges, the efficacy of their decision-making bodies, and the coherence of the practices used across colleges. However, it remains to be seen whether such a framework will suffice, or whether further improvements will be needed. The key challenges now lie in its implementation. Let me mention some examples in this regard.