Current economics paradigm 'ill-suited' to capture financial instability: BIS paper

A reassessment of the macroeconomic roots of financial instability in economic analysis is welcome, but has not gone far enough, according to a Bank for International Settlements (BIS) paper published on Friday.

The paper, authored by Claudio Borio, the deputy head of the Monetary and Economic Department at the BIS, says the recent financial crisis has triggered a major rethink of analytical approaches and policy towards financial stability, including: a sharper focus on systemic risk, the