Financial stability : still unsettled for the future

The focus of this contribution is on financial stability and the extent to which proposed regulatory frameworks deal effectively to avoid financial instability. While microprudential financial stability has been in place prior to and since the Global Financial Crisis (GFC), macroprudential financial stability had been totally ignored prior to the GFC. Since then, however, relevant macroprudential policies have been proposed. We discuss them, especially whether macroprudential proposals have been properly implemented and the extent to which they can avoid future financial instability. These proposals are the US Dodd-Frank Act, the UK Vickers Report, the European Commission’s Liikanen Report, the International Monetary Fund (IMF) tax proposal and the Basel III/Basel IV package. However, although the financial sector around the world is stronger after the crisis, it is exposed to some serious problems that relate to financial stability, which need further strengthening. There is, thus, urgency to complete financial regulatory reforms along with relevant policies.