Economic and Financial Review


Central Bank of Nigeria


Monetary Policy, Financial Stability, Macro-Financial Linkages, Monetary Policy Transmission Channels, Micro-Prudential Policy, Macro-Prudential Policy, Systemic Risk, Interconnectedness.


This paper is structured into two parts. Section I discuss the structure of the macroeconomy and the financial industry, and the interactions between monetary policy and the financial system. The section also showed how monetary policy could create the condition for financial stability. Section 2, on the other hand, discuss the implications of macro-financial linkages for monetary and financial system stability with emphasis on how the new credit risk transfer mechanism (securitisation and derivatives) had altered the nature of some macro-financial linkages, with considerable policy implications. The section concluded by referring to the new direction of macro-prudential regulation and the tools for managing risks created by macro-financial linkages. Reference was also made to the recent subprime financial crisis that started in the US economy with lessons for emerging market economies, such as Nigeria.

Author Bio

Frank Chikezie is the President/Lead Consultant of the Global Heights Consulting Group.

Publication Title

CBN Economic and Financial Review





Recommended Citation

Chikezie, Frank. (2012). Macro-Financial Linkages: Implications or Monetary and Financial System Stability. CBN Economic and Financial Review. 50(4), 14-56.

Included in

Finance Commons



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