Post‐crisis South Asia: monetary management and macro‐prudential regulation

Abstract

PurposeThe global crisis, originating in the US financial sector, affected the Asian region primarily through three channels – declining trade volumes, exchange rate pressure and asset deflation. The purpose of this paper is to focus on how the crisis impacted the four major economies of South Asia, viz. Bangladesh, India, Pakistan and Sri Lanka and how, by a combination of swift actions on the monetary, fiscal and exchange rate fronts, the worst consequences of the crisis were averted.Design/methodology/approachThe regulatory and supervisory systems in these four economies are then benchmarked against certain desirable norms, which have emerged out of post‐crisis international deliberations.FindingsIt is felt that the South Asian regulatory systems perform fairly well vis‐à‐vis these norms.Practical implicationsThe paper also touches upon the major highlights of the crisis impact, policy responses and post‐crisis recovery in the Southeast Asian region.Originality/valueThe several similarities and the few contrasts between the two regions on these aspects are also presented.