The border between pure monetary policy and quasi-fiscal policy sometimes becomes ambiguous. Looking back at the experiences of various countries since the 1990s, when their central bank law had clauses for making some quasi-fiscal policy measures possible, they decided to carry out such measures after careful consideration.
The thrust of regulation may need to be borne by the regulated clusters – particularly deposit taking institutions. However, for the unregulated cluster, the key issues would be to contain their ability for systemic leverage – both directly through banks or indirectly through funding markets and to subject them to an effective reporting arrangement for their inter-linkages with the regulated clusters.