and the other thing is the macro-prudential, so far the macro-prudential has been utilized in the context of incoming capital flows. asia has received quite a lot of capital flows. in the process the capital flow went into the real estate, and the real estate price went up. so, in many of the jurisdictions used the macro-prudential policy to combat the asset price, in the context of incoming capital flows. but now with possibly the reversal of this risk sentiment and possibly the region will be facing outflow of capital instead of inflow of capital. and at the same time we are facing a bit of a softening of the economy. so, if the economy softens, we loosen the monetary policy. but if you loosen the monetary policy, then the asset price inflation may be stoked. so, what are we going to do with these monetary policy, conduct of monetary policy. on the one side you have to combat the demand management. you have to loosen to accommodate the economic activities, but at the same time you have to make sure that it doesn't stoke the asset price inflation. so, the macro-prudential policy uses in

macro prudential policy is to address systemic risk in the financial system. if there are significant capital inflows into asia as we saw right after the 2008 crisis, then macro prudential policy would be the useful tool to use to address exposure of the financial system as a whole, to real estate prices or to some other asset class. now, in the event of capital outflows, macro prudential policy could also be loosened in the event that buffers have already been built. if there are buffers not built then it's important to make sure that macro prudential policy remains where the vulnerabilities or the exposure of the financial sector remain manageab manageable. this might be a long-winded way of saying that i think asia has a sound exchange rate policy. it's a much more flexible exchange rate regime to absorb shocks. it has, most central banlgs have a framework for macro prudential supervision and asia, in fact, has led the world in terms of implementing macro prudential policies address systemic risk in the financial system. >> i mean, let me force one more tim

from a macro-prudential policy perspective and for those who don't know the term, macro-prudential policy, the imf we forget sometimes people don't, you know, know these terms. but it's essentially not supervision of individual financial institutions, but supervision of the financial system from an aggregated perspective. so, you look at the financial system and you see where are the risks coming, so, you know, it may be that individually financial institutions may not be at risk, but on aggregate if there is significant exposure to the real estate sector, for example, that could pose systemic risks to the financial sector, so from a macro-prudential perspective i think it's important also to keep in mind that it is different from exchange rate management. macro-prudential policy is to address systemic risk in the financial system. if there are significant capital inflows into asia as we saw right after the 2008 crisis, the macro-prudential policy would be the useful tool to use to address exposure of the financial system as a whole, to real estate prices or to some other asset class. now

from a macro prudential policy perspective and for those who don't know the term macro-prudential policy at the imf we forget that sometimes people don't know these terms. but it's essentially not supervision of individual financial institutions. but supervision of the financial system from an aggregate perspective. you look at the financial system and you see where are the risks coming. so you know, it may be that individually, financial institutions may not be at risk. but on aggregate, if there's significant exposure to the real estate sector for example, that could pose systemic risks to the financial sector. so from a macro-prudential perspective, i think it's important also to keep in mind that it is different from exchange rate management. micro-prudential policy is to address systemic risk in the financial system. if there's significant capital inflows into asia as we saw right after the 2008 crisis. the micro-prudential policy would be the useful tool to use to address exposure of the financial system as a whole. to real estate prices, or to some other asset class. now in the ev

is that the bank of england is probably going to rely a little bit more on macro prudential policy thentary policy. i think it's something that will deftly weigh on their thinking. betty: the final thought. uan, what did you make of them fixing the reference rate just a little bit stronger? did that provide the confidence or will that be a temporary respite? i think that we are seeing is kind of a repeatable we saw in august. a slight depreciation in the yuan. a little bit of panic engendered by that. then he went quiet for a little while. what we see this week might be followed by another period of quiet. maybe in the late spring or early summer they might do a little bit more. it's a process. mark: there was a piece today that said 80's to follow another 14%, to 7.7% to the dollar if the economy is to see any real benefit. it's not going to follow another 14%. will it fall much further the? richard: i think the people's bank of china is engaged in a process, a slow process of trying to devalue the currency against the dollar. it's been virtually pegged to the dollar in with the dollar

this complex jerryrigged arrangement of macro prudential credit constraints. market is still waiting for some rebalancing there, a move away from quantitative resurgence on credit and other controls towards more price and interest rate based mechanism which without the lira. it would do a lot for inflation. minimum wage is growing by 2% which is not great when it comes to managing inflation as well. >> it could make the inflation problem much worse. the current account much more difficult as well deal of. guy: we saw last tuesday, obama the country which killed german tourists -- a bomb in the country which killed german tourists. on monday they raised expectations. agree.ink, i tend to there was a risk that as you have instability in the region continue to be quite troubling and to continue to spill over into turkey that there will be a bit of a head on tourism, which will be another negative for the current account. the debbie prime minister yesterday made a strong point that the risks and their economic forecasts are somewhat balanced. i would tend to agree