Ladies and Gentlemen, Macro-prudential policy has become an indispensable public policy in safeguarding financial stability across the world. This new perspective has spawned profound changes and impacts on our understanding of how the whole economy operates when the impacts of financial policies and actions are considered.
Macro-prudential policies have become part of the policy paradigm in emerging and advanced economies alike, but less so in most countries of the SAARC region. These policies primarily use prudential tools to limit systemic risk and thus minimize disruptions in the provision of key financial services that can have serious repercussions on the economy.