Strong domestic financial sectors can reduce the need for foreign currency borrowing and become an alternative channel of external funding by attracting foreign investors into domestic currency instruments. High priority must be given to implementing the relevant internationally recognised standards and codes.
Shadow banking involves entities and activities outside the regular banking system, and statistical data collection in many parts is still quite sketchy. Obviously, there is an urgent need for central banks to be given an extended mandate for the collection of data not only from banks but also from non-bank financial institutions. What can be done in the short term?