Financial Integration and Macrofinancial Linkages in Asia

The Asian financial landscape has grown more interconnected over the past 2 decades. Previous financial crises have shown how financial volatility can transmit rapidly across an interconnected financial network. Empirical analyses have shown, moreover, how financial volatility can reverberate across the macro-economy. This report summarizes the lessons from past crises, reviews the evidence of the macro-financial linkages and feedback effects of financial distress, and proposes policy considerations and coordinated responses to enhance financial stability and resilience.