Financial market developments and their implications for monetary policy

Financial market developments and their implications for monetary policy

Joint conference of Bank Negara Malaysia and the Bank for International Settlements on "Financial market developments and their implications for monetary policy", Kuala Lumpur, Malaysia, 13 August 2007.

Drawing upon experiences in the Asia-Pacific region and beyond, these papers characterise the key financial market trends and developments over the past decade and assess their implications for three aspects of monetary policy: (a) the formulation of policy and the transmission mechanism, (b) the implementation of policy at the operational level, and (c) the use of financial market information in the policy process.

The papers presented at the conference were published as BIS Papers No 39 in April 2008.

	Page
Foreword	iii
Programme	v
Participants in the meeting	vii

Conference summary	1
Opening remarks Dato' Ooi Sang Kuang	5

Key developments in the financial landscape
Financial globalisation: key trends and implications for the transmission mechanism Már Gudmundsson	7
Capital, carry, & complacency: key developments in the financial landscape - dynamics of the foreign exchange market and capital flows Brendan Fitzsimmons	30

Impact on the formulation of monetary policy
Impact of financial market developments on the monetary transmission mechanism Sukudhew Singh, Ahmad Razi, Norhana Endut and Helmi Ramlee	49
The changing nature of financial intermediation and its implications Hans Genberg	100

Impact on the conduct of monetary policy
Financial market innovation in Australia: implications for the conduct of monetary policy John Broadbent	114
Developing financial markets and operating monetary policy in Asia Robert N McCauley	126

Usefulness of financial market indicators for monetary policy
Using financial market information in monetary policy: some examples from New Zealand Clinton Watkins	142
Equity prices as leading indicators: the Asian experience Kenneth N Kuttner	167