The pervasiveness and relevance of asset price booms and busts in modern economies has now been fully acknowledged. So has the case for combining prudential regulation and monetary policy in the complementary pursuit of financial and macroeconomic stability.
Global financial integration and the linkages between the financial and the real sides of economies are sources of huge policy challenges. This is now beyond doubt, after what we saw in the run-up to and the unfolding of the 2008 global financial crisis.
A few weeks ago I attended the twice yearly gathering of Oxfam GB’s big cheeses – the regional directors, Oxford bosses and a smattering of more exotic cheeses from other Oxfam affiliates (Australia and US this time). We started off with a tour of the regions – what’s on their minds? 3 common themes emerged: political upheaval (disenchantment with elected governments, protest, the threat of civil war); religious conflict (fundamentalism) and rising inequality.
The topic of this meeting was a classic new fuzzword – ‘leverage’. And like all good fuzzwords, it was frustrating and helpful in equal measure. Frustrating in its hard-to-define slipperiness, helpful because it establishes a fuzzy-boundaried arena of conversation that allowed us to have an interesting exchange.
The overriding purpose of leverage is another bit of management jargon: ‘going to scale’. How to influence bigger players to reach many times more people than you would do by acting alone? The ambition is heroic, perhaps crushing on occasion – with your few thousand (or even million) quid, it’s not enough to just help a few hundred people, you have to think how this can transform lives en masse. I suspect it partly stems from frustration born from aiming too low; partly from the push for results.
If the global financial crisis -- and the events that led up to it -- have taught us anything, it is,“No complacency with asset price booms”. We know first hand the dire consequences of bubbles, so it is clear monetary policy makers can no longer passively observe the evolution of asset prices. If an economy is to pursue macroeconomic and financial stability, they should coordinate with financial supervisors – in an economic marriage of convenience – to ensure financial regulation and monetary policies are complementary, and implemented in an articulated way.
As a policy target, there is little doubt that it is desirable that government should ensure services for all. Breaking this down to a simple target of 100% access to a service, some local governments are showing that ensuring services for all is achievable, when they deploy their social and legal authority to leverage existing service providers to ensure a basic service for all and then increase the quality of the service (i.e. 100% by 100%).
In the remote North West Corner of Bangladesh in the poor and monga (hunger) prone District of Kurrigram there is a remote yet remarkable upazila called Rajarhat. Rajarhat was the first upazila (subdistrict) in the country to be declared Open Defecation Free (i.e. 100% sanitation) in 2004. In the light of the Government’s target of education for all, the Rajarhat upazila (subdistrict) is now seeking to be the first upazila in the country to achieve universal enrollment (i.e. 100% of children turning 6 are enrolled in school).
To understand this phenomena we visited one of the Union Parishads (UP) (Council) called Omar Majid and spent some time with the UP Chairman Khanbaker Abdul Hakim. This Union Parishad claims to have achieved:
• 100% sanitation (achieved in 2004) sustained through ward task forces, hygiene education and public latrines with MGSK and WaterAid.
• 100% registration at birth (achieved in 2007) and subsequently introduced as a pre-requisite for the enrollment of children in school.