As a result, even though financial stability is nothing new to us, we are paying a much closer look at the ways to complementing and reinforcing efforts to enhance the stability of our financial system and its contribution to the whole economy. In the next lines we would go over the way we envisage financial stability in the new international context. 2.
Why is public intervention in financial markets necessary? Public intervention in an industry is commonly justified by the existence of market failures and externalities. Market failures and externalities are particularly pregnant in financial markets. Financial markets operate in an environment of asymmetric information where adverse selection, moral hazard and costly state verification problems play a very important role.