The global financial crisis has led to a sweeping reevaluation of financial market regulation and macroeconomic policies. Emerging markets need to balance the goals of financial development and broader financial inclusion with the imperative of strengthening macroeconomic and financial stability. The third in a series on emerging markets, New Paradigms for Financial Regulation develops new analytical frameworks and provides policy prescriptions for how the frameworks should be adapted to a world of more free and more volatile capital. This volume provides an overview of the global regulatory landscape from the perspective of Asian emerging markets. The contributors discuss the many challenges ahead in developing sound and flexible financial regulatory systems for emerging market economies. The challenges are heightened by the rising integration of these economies into global trade and finance, the growing sophistication of their financial systems as globalization and emergence processes accelerate, and their potential vulnerability to instability arising from the financial markets in the advanced economies. The contributors provide guidance about pitfalls to be avoided, general principles that should guide the creation of sound regulatory systems, and valuable analytic perspectives about how to continue to broaden the financial sector and innovate while still maintaining financial and macroeconomic stability.
Masahiro Kawai is dean and CEO of the Asian Development Bank Institute. Before joining ADBI, he served as head of the bank's Office of Regional Economic Integration. He was a professor at the University of Tokyo's Institute of Social Science and, from 1998 to 2001, was chief economist for the World Bank's East Asia and the Pacific Region.Eswar S. Prasad holds the New Century Chair in International Economics at Brookings, USA. He is the Tolani Senior Professor of Trade Policy at Cornell University, USA and a research associate at the National Bureau of Economic Research. He was previously head of the Financial Studies Division and the China Division at the IMF. They are also the editors of the first two series volumes, Financial Market Regulation and Reforms in Emerging Markets and Asian Perspectives on Financial Sector Reforms and Regulation.