data, which indicate that most categories of household and nonfinancial - firm lending in the current recession do not appear especially weak relative to past recessions. given the enormity of events over the past year, this result is a surprising but reassuring early indication that the combined policies have been successful at shoring up credit despite these events. a note of caution is in order however. in the past, economic downturns were deepened or prolonged by the premature withdrawal of monetary or fiscal stimulus. to the extent that the severity of the current downturn has thus far been mitigated by extraordinary credit support, a significantly weaker path of lending – and thereby economic activity – could very likely occur if policy support for the financial sector is withdrawn too soon. in this case, stigmatization of support tools such as liquidity programs, direct lending programs, or government capital injections that make participants unwilling to use such programs will have the same effect as a direct policy withdrawal of the programs. and while the path of credit in this cycle compared with others is encouraging, the downturn in credit evident in the most recent quarter provides a reminder that conditions are still far from normal.

the bailout ’ s usefulness. thus, a balanced design and effective surveillance mechanisms are crucial. having said that, what is most important is that every individual economy should be committed to making every effort for the stability of its own financial system. first of all, imf ( 2012b ). kim ( 2012a ). hill and menon ( 2012 ). bis central bankers ’ speeches whether financial stability is explicitly included in a central bank ’ s mandate or not, in view of the macro - finance linkage, as the central bank, it needs to prevent the build - up of excessive imbalances in the financial system while not detracting from price stability. additionally, policy makers should measure misalignments in asset prices with alternative indicators, notably economic agent ’ s financial leverage, taking the view that they are one source of systemic risks rather than they should simply be stabilized. based on the results, they need to seek steps such as the use of macroprudential policy to curb the misalignments. furthermore, in coping with highly volatile capital flows, an economy needs to consider capital flow managements 13 which can help lower the proportion of unstable capital flows such as short - term debt and mitigate the boom - bust cycles of capital flows. in today ’ s open global economy, however, the policy effects taken by an individual economy alone can be limited because the effects always spill over to other economies. thus, policy coordination among economies concerned is necessary to ensure the intended policy effect. in this regard, regional cooperative organizations such as the adb, asean + 3, seacen, emeap and indeed this meeting are very important for policy coordination in the asia - pacific region. while we live in a global economy, we know that there is no global jurisdiction. under such circumstances, it is likely that a state of multiple equilibria prevails. good and bad equilibrium can coexist for some time. we may need to remember that an intra - local equilibrium is no more than a “ knife - edge equilibrium ”, which is vulnerable to external shocks and falls short of stability and resilience. 14 in the ongoing eurozone crisis, there has been injection of massive capital in pursuit of intra - regional equilibrium. from the perspective of global equilibrium, however, for the faster recovery of world economy, capital should, by all the principles of economic structural adjustment, flow into economies with faster growth and higher productivity. as pointed out earlier, multiple local