Measures should be consistent with the principles and should be peer reviewed. Recognition of the responsibilities of capital-exporting countries to monitor the risks run by host institutions with respect to currency mismatches, maturity transformation and leverage. The Financial Stability Board’s current initiatives for both the formal and shadow banking sectors are central in these regards.
It also assumes that when the economy starts recovering, the central bank would face no obstacles to increase rates quickly enough to avoid fuelling inflation. In this regard, some observations are useful.