##cyclicality incentives posed by secured lending ( repos ) and e ) reducing vulnerability of money market funds to possible runs. while focusing on improving the soundness of financial institutions, the reforms emphasized heavily on the global and national systemically important financial institutions ( sifis ) and the moral hazards they pose while being vulnerable. since the initiation of reforms, there has been considerable debate on the identification of sifis and the institutions that have the capacity to become sifis. factors such as institution size, suitability and interconnectedness including “ time varying judgment based assessments ” have been prescribed for identification of sifis. under the new reforms agenda, emphasis is on changing too big to fail ( tbtf ) status of sifis and for devising a resolution regime as well as a safe exit mechanism for these entities. further, supervisory authorities are focusing on enhanced supervision of sifis to mitigate the financial risks propagated by them through interconnectedness with other institutions that cause system - wide distress. similarly a multipronged strategy has been adopted for addressing the risks posed by g - sifis ( global sifis ) that comprise development of a new international standard for resolution regimes, more intensive and effective supervision, and requirements for cross - border cooperation, recovery, and resolution planning. the reforms also impose a cost on the sifis in the form of increased capital requirements ranging from 1 % to 2. 5 % of risk weighted assets for enjoying economies of scale and scope and to have higher loss absorbing capacity. as per fsb and bcbs assessment, the long term economic benefits of this additional capital requirement in terms of greater resilience of these institutions far exceed the modest temporary decline of gdp over the implementation horizon. another significant regulatory initiative in the post - crisis period has been greater focus on adopting a macroprudential framework along with traditional inflation targeting and monetary policy models. central banks and regulatory bodies who traditionally have been using microprudential tools to ensure financial system stability are now increasingly using macroprudential tools along with traditional microprudential tools to ensure the soundness and stability of the financial system. the scope of the macroprudential policy framework is very broad and includes ( a ) identifying, monitoring and limiting systemic risks, ( b ) designing and calibrating instruments for executing macroprudential policies and ( c ) building institutional and governance arrangements. bis central bankers ’ speeches though at initial stage, the macroprudential

- through of the exchange rate depreciation and adjustment in energy prices. cognizant of the building up of inflationary pressures, sbp has been pursuing a tight monetary policy stance since early 2018. however, the impact of this tightening is going to reflect in the headline inflation with a certain lag. page 2 of 10 4. at present, barring any sudden shock, the monetary policy committee ( mpc ) of sbp is of the view, as stated in the last monetary policy statement, that the adjustment related to interest rate and the exchange rate from previously accumulated imbalances has already taken place. the recent monetary policy statement has explicitly stated that the mpc decision has inbuilt the impact of following 3 important developments : first, the outlook for external financing has further strengthened with the disbursement of the first tranche associated with the imf extended fund facility, activation of the saudi oil facility, and other commitments of support from multilateral and bilateral partners ; second, the government of pakistan has passed fy20 budget that seeks to improve fiscal sustainability by focusing on revenue measures to widen the tax base. the government has also committed to cease borrowing from the sbp that would qualitatively improve the inflation outlook ; finally, on the international front, the sentiment towards emerging markets has improved as expectations of further policy rate cut in the united states have grown stronger and with all the conducive policies pakistan has the capacity to attract foreign investment. 5. as we know, the effectiveness of monetary policy critically depends on the level of financial sector development, including financial access. therefore, countries with low financial inclusion and financial development may have a weaker monetary policy transmission mechanism as opposed to countries with higher financial inclusion and developed financial markets. globally, financial inclusion is considered page 3 of 10 an effective tool for achieving sustainable and inclusive economic growth, as it is a prerequisite for equitable distribution of the economic opportunities, poverty reduction, and financial stability. pakistan is committed towards broadening access to financial services and implementing development finance reforms and policies that can empower individuals and firms to access a well - functioning financial system, which cultivates opportunities for enhanced socio - economic outcomes, improved livelihoods and protection against economic shocks. the stated vision for financial inclusion in pakistan is to improve the access and usage of quality financial services among individuals and firms, with dignity and fairness. 6. with this vision, and being cognizant of high financial exclusion in the country