Under the direction of the Asian Consultative Council (ACC) of the BIS at its September 2022 meeting, the BIS Representative Office for Asia and the Pacific set up a working group on “Inflation, external financial conditions and macro-financial stability frameworks in Asia-Pacific”. The group commenced in November 2022, with a mandate of examining ACC economies’ macro-financial stability frameworks (MFSFs) during the stressed period of 2022, particularly their joint use of monetary, macroprudential, exchange rate and capital flow management policies. The working group was made up of members from all 13 ACC central banks and monetary authorities. This was the second ACC working group; the first one was established in June 2019 and published its report in November 2020.
This report includes a summary of the working group members’ detailed responses to a comprehensive questionnaire, organised by different elements of MFSFs. It first describes various shocks the central banks and other financial authorities of ACC economies faced during 2022, different economy-specific characteristics (such as structural factors, the state of the economy and policy buffers), the drivers of inflation and the three channels of exchange rates. Then, it examines the policy mix adopted by the ACC economies to achieve the macroeconomic, domestic financial and external stability objectives along the two dimensions (across the economies and over time). Finally, it identifies several lessons from operating MFSFs in 2022.