Firstly, what reforms seem necessary to stimulate financial sector development and, secondly, how can central banks secure financial stability in a globalised economy? These questions are all the more relevant, given the emergence of international financial centres in Beirut, Dubai, Qatar and Bahrain, among others.
The increasing importance of cross-border financial flows means shocks originating in one financial market can quickly be propagated to other markets. To avoid contagion when financial instability occurs, national financial systems need to be adapted so as to be able to contain shocks originating in their own jurisdictions, while also being capable to weather external shocks.