These capital flows reflect in part the continued two-speed nature of the global recovery, as economic growth in the emerging markets is far outstripping growth in the advanced economies. 5 In light of the relatively muted recoveries to date in the advanced economies, the central banks of those economies have generally continued accommodative monetary policies.
Harmonisation of regulatory regimes in the entire financial sector is therefore critical in order to offer consistency and maintain financial stability. The ongoing global financial crisis has only served to underscore the inter-linkages of financial systems.