Therefore, the development of proportionate, risk-based, regulations by policymakers is critical to guaranteeing the development of a dynamic, robust and sustainable microfinance framework for a country. The starting point towards this collaborative structure is a consultative process to developing a forward-looking framework for regulation and supervision of microfinance institutions.
Indeed, in a classic paper written in the early 1960s, Mundell (Mundell, 1963) showed how, in a world of complete asset substitutability and perfect capital mobility, real interest rates would be largely determined by international market forces with the exchange rate moving in response to changes in domestic monetary policy to provide most of the desired accommodation or tightening.