ABSTRACT
The ultimate goal is economic and financial stability, but central banks may have to take a more active role in creating a stable environment for the development of sound financial markets as well as in stabilising short-run movements in inflation. The point is that in small open emerging market economies such as, multiple objectives may need to be pursued in order for policymakers to direct the economy towards the most favourable paths for the development of growth and inflation. Take the balance between inflation and exchange rate stability. The financial system has become more liberalised as the banking system is being integrated with consumers and producers. The financial system has become more liberalised as the banking system is being integrated with consumers and producers, both through direct lending and through financial intermediaries such as insurance companies, pension funds and so on.
