Info-sharing among central banks seen as key to financial stability

The mutual efforts to promote the practice of information sharing and capacity building among regulators and central banks could help strengthen their competencies for better macroeconomic management and financial stability, S K Sur Chowdhury, deputy governor of the Bangladesh Bank (BB), said.
"I believe that global financial stability cannot be achieved through prudential policies and market discipline alone. It requires contributions from monetary and fiscal policies as well," the BB deputy governor said while speaking at the 29th Advisors' meeting of the SEANZA (South East Asia, New Zealand, and Australia) at a city hotel Saturday.
The SEANZA is a regional forum comprising 20 central banks and four financial service regulatory authorities. The Forum was formed in 1956. It is one of the oldest and largest regional central bank groups, established to promote cooperation among central banks by providing intensive and systematic training courses for central bank staff.
Mr. Sur said banks in many countries are suffering a lot due to their high degree of interconnectedness and investments in complex financial derivatives.
"Moreover, changes in the regulatory requirements, development of financial environment and infrastructure as well as economic cycles have played their roles in escalating the aftermath of the global financial crisis through the creation of a broader and deeper financial system," he explained.
"For that reason, we need to evaluate the effectiveness of our policy tools continuously, in particular, the strength of monetary policy transmission mechanism in the changing financial environment," he noted.
The deputy governor also said it is also observed that the traditional supervision tools used by central bankers are no longer effective in addressing the system-wide risks.  
"A micro-prudential dimension is needed to limit the distress of individual banks, while a macro-prudential dimension is required to limit system-wide financial distress."
About 27 senior officials from 13 countries including Bangladesh participated at the meeting. The other countries were Australia, Hong Kong, Korea, the Philippines, Thailand, India, Malaysia, Nepal, Singapore, Pakistan, Sri Lanka, and Papua New Guinea.
Manager of the Reserve Bank of Australia Brett Andrew Winton, Assistant Governor of the Bank of Papua New Guinea Dr. Gae Yandabing Kauzi, and Executive Director of the BB Ahmed Jamal also spoke on the occasion.