Implications of financial market development for financial stability in emerging market economies
Year of Publication
2020
This note highlights the development of financial markets in emerging market economies (EMEs) over the past two decades, their impact on financial stability, and policy challenges.
Source:
Bank for International Settlements
Author(s):
Philip Wooldridge
Geography:
Global
Type:
Primary Data
Purpose of Measurement:
Understanding the Problem
Impact theme(s):
Capital Flows
This note highlights the development of financial markets in emerging market economies (EMEs) over the past two decades, their impact on financial stability, and policy challenges. While financial market development has strengthened the overall resilience of the financial system, it has not eliminated EMEs' vulnerability to large swings in capital flows and exchange rates, as demonstrated during the Covid-19 crisis. Weaknesses in macroeconomic fundamentals and other aspects of the enabling environment continue to hold back market development, and policy challenges remain.