1 That is in part because of its longer duration and in part because of its superior risk-sharing properties. For at least some emerging markets, their national balance sheets appear to be moving to a more robust footing. A second positive development comes from looking at countries’ degree of self-insurance, in particular their stock of foreign exchange reserves. As Chart 12 shows, these have grown dramatically since the second world war and especially since the Asian crisis, both in money terms and relative to world GDP. Reserves have risen from $ trillion in 1995 to over $ trillion by end-2013, or from around 5% of world GDP to around 15% today. Third, this has been accompanied by some augmentation of multilateral official sector facilities for helping handle external financing shocks. For example, since 1980 IMF quota resources have risen from just under $ billion to around $ billion, or from 0.7% to just less than 2% of world GDP (Chart 13). The most significant augmentation in resources came from the New Arrangements to Borrow (NAB) in 2009, which were agreed to increase temporarily the resources available to the IMF at the height of the financial crisis. 1  Bank of England research adds one nuance to this story. Dell’Erba and Reinhardt (2013) find that financial sector FDI appears to behave more like debt flows than traditional FDI flows. BIS central bankers’ speeches  5  Fourth, alongside these multilateral facilities, the past few years have seen rapid growth in regional and bilateral financing facilities (Chart 14).

The benefits of integrated supervision rest on the synergies between banking supervision and monetary policy given that banks play the crucial role in monetary policy transmission mechanism. In such a context, the supervisory information regarding the individual banks’ health can be highly beneficial to central banks in enhancing monetary policy effectiveness. On the other hand, expanding the central bank’s mandate with additional tasks may pose challenges with respect to central bank governance. As noted by Georgsson et al. (2015) the broader the mandate a central bank has, the more often it will be forced to find a balance between different objectives, tasks and tools. Studying the implications of financial stability tasks on central bank governance, BIS (2009) underlines the need for effective governance arrangements that should be designed to deliver sustainable conduct of monetary policy functions in combination with the additional mandate to contribute to financial stability. Further, the Report stresses the importance of clarity with respect to financial stability responsibilities, policy transparency as to promote accountability, full autonomy to safeguard against political pressures and undue influence from business and industry and close collaboration with other regulators in the country. Another important aspect is the central bank balance sheet which should be sound enough with strengthened risk-bearing capacity to enable successful implementation of monetary policy and support financial stability in case of emergency. Going back to banking supervision, besides the institutional setup, another important question raised by the crisis relates to the role of transparency and accountability in promoting more effective banking supervision.