Monetary policy frameworks are much improved but could be strengthened further
Monetary policy frameworks in the Emerging Asia countries have changed
markedly since the 1997-98 Asian financial crisis. Following the abandonment of the
fixed exchange rate peg to the USD and the resulting increased autonomy for domestic
monetary policy, central banks in Indonesia, Malaysia, the Philippines and Thailand
reoriented their monetary policy frameworks, with price stability as the central objective
and with interest rates as the chief operational instrument. In China, the monetary
policy framework has largely abandoned its earlier “command and control” approach
to macroeconomic management in favour of an increasingly market oriented approach
dependent on indirect instruments