Emerging countries have tended to use instruments for suitable for macroprudential
policy more heavily than have advanced economies (Lim et al., 2011). This
partly reflects the use of such instruments in monetary policy operations, the lesser
development of financial markets and often more limited flexibility of interest rates
(which favour the use of direct over indirect instruments) and the greater use of capital
controls. The middle-income Emerging Asian countries rely particularly on loan-tovalue
and to a lesser extent debt-income caps on lending and on limits open currency
positions (Table 3.13). China, Malaysia and Thailand seem to have made most extensive
use of macroprudential instruments, while the Philippines and Indonesia have made
less use of them. None of the countries has as yet used more dynamic macroprudential
instruments, such as counter-cyclical capital or provision requirements