Central banks and financial regulators in developing countries are confronted with major challenges:  They face substantial pressure to pursue their mandate of safeguarding stability, in particular by reforming national financial regulations. At the same time, national and domestics actors expect them to engage in the promotion of financial sector development.
The focus of this research project are the trade-offs and synergies which emerge where central banks and financial regulators do not confine themselves to safeguarding stability but seek to play a transformative role by developing national financial and capital markets. Key research questions are: Under which conditions do financial regulators in developing countries manage to achieve a balance between their mandates between financial stability and financial development? Which factors promote, which impede such a balance? As political economy factors seem important determinants of outcomes, a main focus of this research is the interplay between national political economy factors and international institutions.