Many EMEs had financial stability as an additional objective of their monetary policy framework and therefore used multiple instruments, including quantitative tools such as the cash reserve ratio to moderate the pace of domestic credit growth as well as monetary impact of large capital flows (e.g., China, India and Russia).
Macro-prudential measures in the form of loan loss provisioning requirements were used to target certain sectors in a number of EMEs (Moreno, 2011). Apart from raising provisioning requirements (on banks’ exposure to systemically important nonbank financial institutions), risk weights (for housing loans, consumer credit and commercial real estate) were also used to check unbridled credit growth in specific sectors.