The main reason for this is that LCBMs help reduce currency and maturity mismatches, which trigger and amplify crises. Thus, they help check contagion and prevent spillovers to the real economy.   LCBMs make the financial system more diversified, and make it easier for enterprises to access finance on international credit markets in times of tension.
Second, an efficient and resilient financial system is an essential enabler to growth and inclusion. But, third and critically, markets only work well within sound policy frameworks. All markets – and financial markets in particular – need clear rules, diligent oversight, and consistent enforcement of the rules.