The Role of Central Banks in Sustaining Economic Recovery and in Achieving Financial Stability
AbstractWhenever a financial crisis occurs, threatening a possible financial meltdown, central banks have to be at the
forefront in combating, neutralizing the crisis and restoring financial stability and economic growth. In this regard, the present
sub-prime crisis which originated from the US highlights a few key issues for the SEACEN group of central banks. This paper
reviews the policy responses to the crisis which include exit policy strategies from stimulus monetary packages. To
strengthen the soundness of the financial system going forward, the paper also highlights counter-cyclical and macroprudential
regulations that central banks need to actively look into.
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