Book contents
- The Changing Fortunes of Central Banking
- The Changing Fortunes of Central Banking
- Copyright page
- Contents
- Figures
- Tables
- Contributors
- Acknowledgement
- 1 Introduction and Overview
- Part I Monetary Economics and Policy
- Part II Financial Stability and Regulatory Policy
- 8 The Macroprudential Toolkit
- 9 Three Cooks or Three Wise Men?
- 10 Liquidity, Default and the Interaction of Financial Stability and Monetary Policy
- 11 Systemic Risk Measurement and Quantification of Systemic Risk Amplification
- 12 What Binds? Interactions between Bank Capital and Liquidity Regulations
- 13 Is Burden Sharing Needed for International Financial Stability?
- Part III Foreign Exchanges and International Architecture
- Part IV The Millennium Challenges of Central Banks
- Index
- References
9 - Three Cooks or Three Wise Men?
The Interplay between Monetary, Macroprudential and Microprudential Policies in Supporting Financial Stability
from Part II - Financial Stability and Regulatory Policy
Published online by Cambridge University Press: 29 March 2018
Book contents
- The Changing Fortunes of Central Banking
- The Changing Fortunes of Central Banking
- Copyright page
- Contents
- Figures
- Tables
- Contributors
- Acknowledgement
- 1 Introduction and Overview
- Part I Monetary Economics and Policy
- Part II Financial Stability and Regulatory Policy
- 8 The Macroprudential Toolkit
- 9 Three Cooks or Three Wise Men?
- 10 Liquidity, Default and the Interaction of Financial Stability and Monetary Policy
- 11 Systemic Risk Measurement and Quantification of Systemic Risk Amplification
- 12 What Binds? Interactions between Bank Capital and Liquidity Regulations
- 13 Is Burden Sharing Needed for International Financial Stability?
- Part III Foreign Exchanges and International Architecture
- Part IV The Millennium Challenges of Central Banks
- Index
- References
Summary
Monetary, macroprudential and microprudential policies all affect financial stability. But effects vary across policies, and are not independent of one another. This chapter discusses the roles of each policy relative to financial stability, and then considers the interactions between policies. It finds that a clear allocation of objectives and instruments is best able to achieve a safer financial system, and that appropriate institutional arrangements are needed to harness complementarities and reduce conflicts. The underlying theme is that the three policies can reinforce and complement each other like “three wise men;” they do not have to be like “three cooks” getting into each others’ way while making the same dish.
- Type
- Chapter
- Information
- The Changing Fortunes of Central Banking , pp. 135 - 152Publisher: Cambridge University PressPrint publication year: 2018
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