The new initiatives would pave the way to further innovation in the banking sector, enhance the safety and efficiency of financial markets, and underpin the real economy. It is encouraging in this regard to see that ambitious talks among the relevant authorities in Asia are already under way.
The economics profession in recent years has made some progress in formulating answers to these questions, but the limits of our understanding remain substantial. Today, I will focus on a subset of these issues, examining an aspect of the recent emerging markets crisis that remains something of a puzzle.