on to help prevent asset price booms and complement monetary policy. but there is still much to be explored around the nature of the interaction of monetary and macro - prudential policies, the costs and benefits of such interventions, and the circumstances where such policy initiatives are likely to be successful. particularly important in this regard will be considerations as to how best to coordinate monetary policy and macro - prudential policy decisions when economic and financial cycles are out of sync and the policies are not complementary. for excellent discussions on this see rey h. 2014 “ dilemma not trilemma : the global financial cycle and monetary policy independence ”, and turner p. 2014 “ the macroeconomics of macro prudential policies ” presentation at the conference on “ effective macro - prudential instruments ”, the university of nottingham centre for finance, credit and macroeconomics. bis central bankers ’ speeches concluding comments monetary policy ’ s focus on price stability has played a vital role in the more stable and responsive economic climate that has emerged in new zealand over the last 25 years. under this climate, the economy has been able to take advantage of new trading opportunities in asia and elsewhere ; there has been strong growth in new sectors of activity – including in the information technology area ; and the economy has been resilient in the face of severe external and domestic shocks, notably from the gfc and the christchurch earthquakes. moreover, the ability of monetary policy to help offset short - term shocks to output and employment has grown as inflation expectations have stabilised at a low level and as policy credibility and transparency have increased. new zealand is not alone in these experiences : all major central banks now see price stability as their main objective and the most important contribution they can make to stronger long - term economic performance. while much has been achieved in these first 25 years of the reserve bank act, important issues and challenges remain. the global economic environment remains difficult, we have experienced rapid increases in house prices, and we face the longer - term need to improve domestic productivity and savings and rein in the economy ’ s external imbalances. these global and domestic challenges serve as a reminder of what can and cannot be achieved through monetary policy to counter the sorts of pressures the economy may face in the years ahead. for example, monetary policy is relatively powerless to offset the spillovers that global economic and policy developments can impose on our exchange rate and commodity export prices. but, monetary policy can complement structural and fiscal policies in supporting the economy ’ s flexibility and

mr. sherwin reviews economic prospects and challenges for asia and the pacific region address by the deputy governor of the reserve bank of new zealand, mr. murray sherwin, to the new zealand institute of international affairs in wellington on 15 / 10 / 98. i was asked to discuss the economic prospects for asia and the pacific. i ’ m going to take a fairly liberal interpretation of the topic. you will not be surprised that my comments are framed within a high degree of uncertainty about the direction of the global economy. events of the past year or more have been dominated by a growing sense of contagion spreading from the initial thai problems, and now affecting most parts of the world. even over the last couple of months, we have seen russia and latin america faltering, and a substantial re - rating of corporate profit prospects in the usa and europe. as we look forward to 1999 and 2000, we can do no better than guess at when these downward influences will run their course, and when robust, sustainable, recovery will commence within the asian region. however, i will offer a few guesses on asia ’ s prospects. i will also offer some observations on the nature of the adjustments and transitions now being worked through in asia, especially within the financial sectors of the affected countries. the asian growth story the asian growth story, over three decades or more, has been extraordinary, with sustained annual expansions of the order of 7 to 10 percent. that is more than just a statistical nicety. not only has asian economic success supported growth in the rest of the world, it has been the driving force in the most profound process of poverty alleviation in human history. by world bank estimates, where 60 percent of east asians lived in absolute poverty ( i. e. less than us $ 1 per day ) in 1975, 20 percent were living in absolute poverty in 1995. the numbers living in poverty have declined, the severity of poverty has declined, life expectancy has climbed, infant mortality rates and literacy indicators have all improved in tandem with economic growth. growth created jobs for the poor, and provided opportunities to expand their productivity. the asian miracle was real and tangible. of course, paul krugman made himself famous, and unpopular in some parts, by arguing that while asia had generated extraordinary growth over an extended period, there was no magic formula that the rest of us could borrow in order to imitate that growth performance. to use krugman ’ s now - famous line