MANILA, PHILIPPINES - Asian Development Bank (ADB) President Haruhiko Kuroda today urged developing Asia's policymakers to implement macroeconomic and regulatory policies that would help sustain the region's recovery and enable their economies to become more responsive and resilient to future crises.
"As the recovery gathers momentum, we must have a clear understanding of the lessons that we have learned over the past two years and set the foundations for a more stable global financial system," Mr. Kuroda said in his address to the "Impact of the Global Crisis on Asia - Lessons Learned, Policy Insights and Outlook", a regional forum attended by central bank governors, finance ministers, and officials from 14 countries in developing Asia. It is the third and last in a series of forums organized by ADB to help find solutions to the crisis.
Mr. Kuroda said that the push given by expansionary fiscal and monetary policies had certainly helped strengthen domestic demand and compensated for the sharp decline in world trade at the height of the crisis. This had allowed developing Asia to rebound strongly from the crisis, with growth now forecast to reach 8.2% in 2010.
Referring to the role of ADB during the crisis, Mr. Kuroda said that ADB had also played its part in helping revive domestic absorption, and substantially increased its lending level during the crisis period to countries hard hit by the crisis.
However, the gradual easing of stimulus, and a combination of monetary and fiscal policies will be crucial for fostering macroeconomic stability and sustaining growth in the post-crisis period.
The crisis also raises policy challenges for central banks. "There is a growing consensus that macroprudential instruments should be used to support financial stability," he said. Changes are also needed in the operational frameworks of central banks, including widening the definition of collaterals, increasing the maturity of central bank loans to banks and improving cross-border liquidity provisions, Mr. Kuroda added.