of the financial system. new standards for regulation and prudential supervision were introduced in the form of more demanding capital and liquidity requirements and the resilience of financial institutions is now also assessed by means of stress - testing. on 3 / 6 bis central bankers'speeches top of that, with macroprudential policy, a new policy domain has been created. it is natural to see central banks playing an important role here, given their knowledge of the financial system and their macro reflex typically adopted in the monetary policy domain. that is a clear trend we see worldwide since the crisis. obviously, being more active in the financial stability domain comes with new challenges and, to some extent, also with new risks for central banks. despite considerable progress made in the macroprudential policy domain, additional research on its transmission mechanisms is still needed. such research must also address the issue of interactions with monetary policy. i claimed earlier that monetary policy should keep its primary focus on price stability and that prudential policies should act as the first line of defence against financial instability. that setting indeed comes closest to tinbergen ’ s ideal world where two distinct policy instruments are available for two different objectives. still, it would be naive to think that monetary and macroprudential policy are two fully independent instruments, as they both act through the financial system. so, i think the future of central banking also lies in learning more about possible interactions, complementarities and scope for effective coordination between monetary and macroprudential policy, without blurring, though, the distinction between the different policy domains, their respective mandates and accountability frameworks. i would like to flag one more challenge in this domain, which will have an impact on the future of central banking. part of the argumentation of having prudential policy as the first actor in the financial stability domain rests on its capability to be more targeted, while monetary policy is often seen as too blunt an instrument for these purposes. however, this more targeted nature tends to come with more pronounced distributional effects. moreover, financial stability will always be a shared responsibility where fiscal authorities have their role to play. for these reasons, tensions could arise when these instruments are given to independent central banks. but at the same time, there are also forces pushing towards allocating them to independent institutions. doing so indeed allows coping with the so - called inaction bias, which in this case may be quite pronounced precisely as a result of the targeted, and therefore fairly visible

unnati - access to finance ( a2f ) partnerships launch ceremony with bfis closing remarks by dr. chiranjibi nepal, governor, nepal rastra bank 8 may 2017 hotel yak and yeti, kathmandu ms. valerie julliand, un resident coordinator, ms. ingrid dahl - madsen, charge d'affaires, embassy of denmark, mr. vincent weirda, regional technical advisor, uncdf, mr. shiba raj shrestha, deputy governor of nepal rastra bank, officials from government of nepal and other agencies, officials from nepal rastra bank ceos and representatives from banks and financial institutions, friends from the media, distinguished guests ladies and gentlemen it gives me immense pleasure to be here at this challenge fund partnership launch ceremony of unnati - access to finance program with different bfis. allow me, at the outset, to extend my sincere appreciation to the embassy of denmark and uncdf for supporting the government of nepal by launching this project that aims at expanding financial access to the rural people and help raise their living standards and ultimately reduce the poverty level in the country. distinguished guest, ladies and gentlemen, financial access broadly refers to the reach of financial institutions and their products to the doorsteps of the people throughout the country. this would create opportunities for the people to involve themselves in in - come generating activities and hence improve their wellbeing. as some 80 percent of nepalese population live in rural areas and about two - thirds of them rely on agriculture, extending financial services to the rural people is especially meaningful for inclusive growth of nepal. acknowledging this need, the government of nepal and nepal rastra bank have long been undertaking a host of policy measures to increase access of financial services to the rural areas through different modalities. one such modality is project financing under which government of nepal and nrb have been working with different bilateral and multilateral donor agencies to implement different projects. unnati - access to finance is one such project that is supported by government of denmark along - with united nations capital development fund ( uncdf ). the 5 - year project ( 2014 - 18 ) is being implemented by nrb in the 7 hilly districts of eastern development region ( edr ) by supporting bfis to more effectively serve the agricultural value chain actors with appropriate financial products and services. consequently, it also aims to enable smallholder farmers and micro small and medium enterprises ( msmes ) to invest into their agriculture value chain activities leading to