Under this policy, the Federal Reserve would stand ready to use its balance sheet to hit the targeted interest rate, but unlike the asset purchases that were undertaken in the recent recession, there would be no specific commitments with regard to purchases of Treasury securities.
These include a) constructing an appropriate tool kit to tackle with systemic risk; b) evolving an optimal mix of rules and discretion while using macro-prudential policies; and c) extending the perimeter for macro-prudential instruments to encompass the shadow banking system. Ladies and Gentlemen, Prior to the global financial crisis of 2007-09, Nepal Rastra Bank had accorded more focus on micro-prudential policies.