Building strong banks

The twin themes of this book - surveillance and resolution- involve issues that are at the core of the IMF'S recent work on the financial sector. Although the intensity of this work is relatively new, the IMF has long recognized that an appropriate macroeconomic policy stance alone is not sufficient to maintain balance in an economy; sound underlying microeconomic conditions are also vital. In no area is this more important than in monetary policy. Maintaining a monetary policy stance geared to price level stability requires a sound and competitive banking system to transmit policy signals and to ensure the efficient allocation of financial resources. Moreover, maintaining openness to international capital markets requires a sound and well regulated banking system through which these flows can be intermediated. The IMF helps to promote bank soundness through its surveillance, lending and technical assistance activities.