Experts on Thursday stressed the need of a universally sound macro-prudential policy in the Saarc region to safeguard financial stability throughout the region. 

The macro-prudential policy is public policy that primarily uses prudential tools to limit systemic risks and thus minimise disruptions in the provision of key financial services that can have serious repercussions on the economy.

“Although macro-prudential policies have become part of the policy paradigm in emerging and advanced economies, the Saarc region is much behind in this issue,” said Nepal Rastra Bank (NRB) Governor Chiranjibi Nepal, addressing the inaugural session of the Saarc Finance seminar on Macro-prudential Policies in Saarc being held in Kathmandu. “In this digital era that seeks to encourage electronic transaction settlement system with the aim of minimising the use of cash, the adoption of macro-prudential supervision would persuade banks to adequately manage their investment portfolios and foster risk management.” Unlike the case of monetary policy where there has been a clear consensus about the crucial role of the policy rate and supported by clear and coordinated communication, a comparable consensus is still absent in the literature on macro-prudential policy, Nepal added. 

The two-day seminar organised by NRB kicked off on Thursday where more than two dozen experts of the region are participating with common objective of understanding and reviewing the macro-prudential policies implemented in the Saarc member countries.