In my years as a central banker, there seems to be an unspoken rule among global policymakers that certain policy paths are one-way, no-return endeavours. Any policy reversals are seen as a backward move that is time inconsistent, which could risk a permanent damage on trust, reputations and credibility of the central bank. For me, this mindset is not tenable and counterproductive. It is imperative to realise that under extreme circumstances, a reversal of policies may be beneficial and in fact, necessary for the greater good and wellbeing of the society. Sometimes, taking a step backward may be the best way forward. A case in point is in the area of liberalisation. While we have benefitted from an open market, and are strongly committed to the principles of this approach, we believe that countries should be cautious in its adoption, giving due consideration to the various trade-offs and preconditions. There might be a situation where a ‘short moratorium’ for further liberalisation becomes necessary. As with everything else, a balanced approach is always the preferred and wiser option. Liberalisation is not a ‘cure all’ for economic development. It is not a panacea for economic sustainability either. Liberalisation requires patience and sequenced planning. Greater openness needs to be phased in and be consistent with the readiness of the domestic market. Should expanded relaxation of policy become a source of financial instability, policymakers must be decisive and have the boldness to change course. This brings me to my final point of my remarks today.

Domestic policymakers have greater understanding of the local economic and financial conditions, with the necessary experience in dealing with countryspecific circumstances. In this regard, multilateral institutions must respect that individual countries, as independent institutions, have made the tough but necessary choices after careful and deliberate considerations. Multilateral institutions possess great breadth of cross-country information to dispense prescription for its member countries. But there is no such thing as a ‘one-pill-cures-all’ remedy. Instead, tailored policy responses are essential given the unique and diverse nature of emerging economies. As the world becomes increasingly more integrated and harmonised, we welcome the value of global coordination and interaction if it adds to the betterment of society at large. But where peculiarities exist, member institutions ought to be given the space to exercise their autonomy. We must also avoid the rush towards greater cross-country standardisation that impinge on policy flexibility or where policies are judged based on pre-subscribed narrow definitions, theories and concepts rather than the actual outcomes. The never-ending debate on the categorisation of policies as capital flow management measures or macro prudential policies is one such contention. In an increasingly integrated and complex environment, the impact of shocks varies between countries. The policy would also vary. Even if policies are similar, the outcomes might be different. The work of multilateral institutions becomes even more difficult and complex. For instance, any mis-categorisation of policy could prematurely reverse the effectiveness of that policy, given the impact it might have on investor perception and sentiment.