Prudent regulation helps Asia-Pac economies head off asset bubble

Sydney

YEARS after the biggest global financial meltdown since the Great Depression spurred debate over how policymakers can head off asset bubbles, tentative evidence is emerging from Asia-Pacific economies that prudent regulation can prove effective.

From Singapore to Sydney to Seoul, regulators have implemented prudential rules that target house-price inflation at the same time as they deliver stimulus to their economies through monetary policy. As the list of countries dropping rates towards zero lengthens, macro-prudential measures, once out of favour in the developed world, are staging a comeback.

"Asia has been a pioneer in macroprudential measures," said Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc in Hong Kong. "Ideally the region would've had higher interest rates in recent years to cool down speculative pressure, but …