MPFD Policy Brief No. 101: Maintaining financial stability in Asia and the Pacific

Most Asia-Pacific economies have maintained a largely accommodative monetary policy stance in the past decade. However, lower policy rates have not been fully translated into stronger growth, but contributed to financial instability in terms of higher private debt, which harms long-term economic growth. A prudent approach to monetary policy would be needed to focus on maintaining price and financial stability. Policy makers shall accompany traditional monetary policies with macro-prudential policies and regulations to strike a balance between supporting short-term growth prospects while containing the build-up of financial risks.