Executive Summary :
New financial products (NFP) are often defined as the emergence of new financial instruments in more sophisticated and developed financial markets. In the development of more complete markets, the existence of new financial products can improve resource allocation, thereby supporting longer term growth prospects. In more advanced markets,  the existence of new financial products appear to reduce growth volatility, allow firms to have a more flexible financial structure and  households to  have smoother consumption in the face of temporary changes in their income. However, financial innovations pose new challenges for central bankers as they can make monetary analysis more complex by modifying the monetary policy transmission mechanism, and in some cases even endanger financial stability.

 The global financial crisis has demonstrated its potential risks to the markets and poses challenges for central banks. In view of this, central banks need to track the trade mechanisms of new financial products and their roles in the financial markets. Central banks need to closely coordinate policies on new financial products and share information with the other financial authorities, based upon its understanding of trades in new financial product and their linkage effects. Read more

Executive Summary :
This study attempts to review policy options available for the authorities and examine their relative effectiveness in SEACEN member economies during the recent global financial crisis. During normal times, authorities often have space and flexibility to use policies impacting macroeconomic stability and sustaining economic growth but in crisis situations, the challenges can be quite different from those under normal conditions. Firstly, policy makers have limited options with regard to choice of policies and implementing them within a short period of time to address critical issues and obtain desirable outcomes. Secondly, the degree of effectiveness of the policies that have been adopted could also be different when compared with the results that were achieved through the same set of policies under normal circumstances. The outcome also may change from country to country as well as conditions under which such policies are adopted. Thirdly, normal monetary transmission mechanism may not be effective in a situation of market failure or lack of market confidence. Further, conventional policies may not be suitable and may have limited success in a particular sector which needs special attention during a crisis. Therefore, choosing effective policies to mitigate a crisis and obtaining the desired outcome within a short period of time is a formidable challenge that the policy makers face in a crisis situation. Read more

Executive Summary :
Global financial crises have demonstrated that monetary policy is not the only approach for stabilisation and robust microprudential regulation and supervision are not sufficient to mitigate risks to financial system stability. These lessons imply that policymakers, especially financial authorities including the central bank, have to continually focus on strengthening financial system stability. Although all out efforts to avoid a crisis will not assure zero financial crisis in the future, the preparation for crisis prevention and resolution are absolute necessities. The central bank should be accountable for implementing procedures for maintaining and promoting financial system stability.

Macroprudential surveillance and microprudential supervision for financial system stability are very difficult tasks and require collaboration among authorities, not only within the economy but also among countries. Given the variances in financial system infrastructures and levels of financial development among SEACEN economies, the availability of diverse sets of macro and micro-prudential indicators is indeed vital. This study provides a survey of how the SEACEN economies promote financial system stability. It assesses the policies, tools and indicators that are available to financial authorities in SEACEN economies and provides suggestions for their improvement. The nine participating economies provide an analysis of their current situations and macroprudential approaches for financial system stability strengthening. Their efforts in maintaining financial system stability and resilience are commendable. However, having said that, many improvements can still be made due to the continuous innovation and development of the financial system. Read more

Executive Summary :
The role of international banking and lending to the emerging markets has been long debated. To date, the balance of evidence supports the view that foreign bank entry into the domestic banking system has been largely a positive one. The liberalisation of local banking systems and the presence of foreign banks have, indeed, been contended to promote institutional and regulatory/supervisory improvements and have also resulted in more efficient allocation of productive resources in globalised economies. Likewise, foreign banks have been touted as a stabilising force for host markets. Yet, this proclaimed stabilising role may seem at odds with the view that activities of the global banks have spread profound difficulties in international financial markets, including the SEACEN economies, during the recent subprime financial crisis period. The objective of this research project is to evaluate a number of perspectives on the presence and bearing of the global banks in SEACEN economies. In particular, it seeks to address a number of rising policy concerns from the aftermath of the recent subprime crisis. Read more

Executive Summary :
This paper attempts to examine the real sector propagation of the recent global financial crisis in the SEACEN economies. This is of particular interest as SEACEN economies are known for their trade-oriented nature. In particular, during the subprime crisis, weak demand, particularly in traditional export markets of SEACEN economies like the United States, Japan and European markets, had an adverse effect on the current account of the SEACEN economies. However, when examined more closely, the non-availability of trade financing could be identified as a potential reason to the weakening of exports. Establishing possible links between trade financing (financial sector) and trade sector performance (the real sector), commonly referred to as macro-financial linkages is crucial to gather a better understanding of the impacts of the financial sector, particularly following the recent sub-prime crisis.
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