Toward Stability and Efficiency Improvement of Financial and Economic Systems \Perspective of Macro Policy Mix and Financial Markets \

Throughout its whole process, the global financial crisis that broke out in 2007 threw into sharp relief the interconnections between fiscal and real economic conditions and financial systems in developed countries, from the accumulation of risks and the materialization of the crisis to the post-crisis recovery. Therefore, in the future, it will be important for fiscal, economic and financial policies to be managed in collaboration with each other, rather than to be implemented in pursuit of their respective goals. However, there is little room for discretionary fiscal expenditures in the environment of glow growth and low inflation h that is the prominent feature of the financial and economic situations after the crisis \ behind the low growth and low inflation may be inefficient allocation of economic resources due to the ongoing adjustment of government liabilities into which excessive private-sector liabilities have been transformed \ and the limits of gunconventional monetary policy are being exposed. The gmacro prudence policy, h which aims for financial system stability, is being promoted together with the enhancement of the supervision of financial institutions. In the meantime, it cannot be said that the financial system is adequately playing its role of efficiently allocating economic resources at the macro-economic level, partly as a result of the negative side effects of the gunconventional monetary policy. h As a way for developed countries to pursue financial and economic recovery, they may manage policies for the macro stability of the financial system and policies for efficient macro-allocation of economic resources through the financial system in a better-balanced manner. One option for that purpose is for central banks to manage the two policies in which they have been involved since the financial and economic crisis \ macro prudence policy from the perspective of financial system stability and credit easing from the perspective of efficient resource allocation \ based on a consistent approach. On the other hand, in the long term and as a general rule, supervisory authorities may be mainly responsible for supervising individual financial institutions and fiscal authorities may be mainly involved in a macro policy whereby administrative intervention in resource allocation is made in order to avoid excessive concentration of macro policy functions and roles at central banks. Even if a reform like this is to be implemented, it will only be more important than ever for policy authorities to communicate with each other. Policy authorities involved in macro financial and economic policies are also required to make full use of available means while cooperating under the existing framework.