Countercyclical policies undertaken by monetary authorities, more capital requirements for banks and effective liquidity management are the most important measures needed for financial stability and growth, Mr Jaime Caruana, General Manager, Bank for International Settlements, said on Wednesday. He was briefing the media at the end of the first international conference conducted by CAFRAL (Centre for Advanced Financial Research and Learning) on ‘Financial sector regulation for growth, equity and stability in the post-crisis world'. In response to a question, Mr Caruana said fiscal authorities must create enough space and be ready to build buffers during good times. He said it was easy to overestimate the health of the Budget during a credit boom, and cited the example of his own country, Spain, which moved dramatically from a surplus Budget to a deficit when the credit boom ended. Mr Caruana was Governor of the Central Bank of Spain till 2006. Briefing media persons on the conference deliberations, Ms Usha Thorat, Director, CAFRAL and main organiser of the conference, said there was greater appreciation among western nations about the need for equity as one of the objectives of financial regulation. The focus was always on growth and deregulation earlier, but this had begun to change after the crisis of 2008, she said.
HBL
