Hostname: page-component-cd9895bd7-dk4vv Total loading time: 0 Render date: 2024-12-22T18:23:34.986Z Has data issue: false hasContentIssue false
  • English
  • Français

Macroprudential Policy - Taxonomy and Challenges

Published online by Cambridge University Press:  26 March 2020

Erland W. Nier
Erland W. Nier*
Affiliation:
International Monetary Fund
*
e-mail [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

There is increasing recognition that prior to the global financial crisis financial regulation had lacked a macroprudential perspective. There has since been a strong effort to make a new macroprudential orientation operational, including through the establishment of new macroprudential authorities or ‘committees’ in a number of jurisdictions. These developments raise — and this paper explores — the following three questions. First, what distinguishes macroprudential policy from microprudential policy and what are its key tasks? Second, what powers should be given to macroprudential authorities and what should be their mandate? Third, how can governance arrangements ensure that macroprudential policies are pursued effectively? While arrangements for macroprudential policy will to some extent be country-specific, we identify three basic challenges in setting up an effective macroprudential policy framework and discuss options to address them.

Keywords

Macroprudential policysystemic riskgovernance
Type
Research Articles
Information
National Institute Economic Review , Volume 216 , April 2011 , pp. R1 - R15
Copyright
Copyright © 2011 National Institute of Economic and Social Research

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

∗

This article is a revised version of a paper given at the IMF/Federal Reserve Bank of Chicago conference on 'Macroprudential Regulatory Policies: The New Road to Financial Stability' in September 2010. I would like to thank the editor, Ray Barrell, for his comments, and Karl Habermeier, Luis Jacome and Jacek Osinski for stimulating discussion. The views contained in this paper are those of the author and do not necessarily represent those of the IMF, its management or executive board.

References

Acharya, V. and Yorulmazer, T. (2007), ‘Too many to fail - an analysis of time-inconsistency in bank closure policies’, Journal of Financial Intermediation, 16, pp. 1–31.CrossRefGoogle Scholar
Barrell, R., Davis, E.P., Fic, T., Holland, D., Kirby, S. and Liadze, I. (2009), ‘Optimal regulation of bank capital and liquidity: how to calibrate new international standards’, Financial Services Authority, Occasional Paper no 38.Google Scholar
Basel Committee on Banking Supervision (2010a), ‘Countercyclical capital buffer proposal’, Consultative document, July.Google Scholar
Basel Committee on Banking Supervision (2010b), Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems, December.Google Scholar
Borio, C. (2003), ‘Towards a macroprudential framework for financial supervision and regulation?’, BIS Working Paper No. 128, February.CrossRefGoogle Scholar
Borio, C. and Shim, I. (2007), ‘What can (macro-) prudential policy do to support monetary policy?’, BIS Working Paper No. 242.Google Scholar
Caruana, J. (2010), ‘Systemic risk: how to deal with it?’, Paper for the first international research conference, Bank for International Settlements.Google Scholar
Committee on the Global Financial System (2010), ‘Macroprudential instruments and frameworks: a stocktaking of issues and experiences’, CGFS Papers No. 38.Google Scholar
Crockett, A. (2000), ‘Marrying the micro- and macro-prudential dimensions of financial stability’, BIS speeches, 21 September.Google Scholar
Dewatripont, M. and Tirole, J. (1994), The Prudential Regulation of Banks, MIT Press.Google Scholar
Geanakoplos, J. (2010), ‘Solving the present crisis and managing the leverage cycle’, FRBNY Economic Policy Review, August.CrossRefGoogle Scholar
Goodhart, C. (2008), ‘The boundary problem in financial regulation’, National Institute Economic Review, October.CrossRefGoogle Scholar
Goodhart, C. (2010), ‘The changing role of central banks’, BIS Working Paper No. 326.Google Scholar
Gray, S. (2011), ‘Central Bank balances and reserve requirements’, IMF Working Paper 11/36.CrossRefGoogle Scholar
HM Treasury (2010), ‘A new approach to financial regulation: judgment, focus and stability’, July.Google Scholar
International Monetary Fund (IMF) (2010a), Central Banking Lessons from the Crisis, Washington, International Monetary Fund.Google Scholar
International Monetary Fund (IMF) (2010b), ‘Global liquidity expansion: effect on ‘Receiving Economies and Policy Response Options’’, Chapter 3 of the April 2010 Global Financial Stability Report, Washington, International Monetary Fund.Google Scholar
International Monetary Fund (IMF) (2011a), Macroprudential Policy: An Organizing Framework, Washington, International Monetary Fund.Google Scholar
International Monetary Fund (IMF) (2011b), ‘Housing finance and financial stability - back to basics?’, Chapter 3 of the April 2011 Global Financial Stability Report, Washington, International Monetary Fund.Google Scholar
International Monetary Fund, Financial Stability Board and Bank for International Settlements (2009), Guidance to Assess the Systemic Importance of Financial Institutions, Markets and Instruments: Initial Considerations, Washington, International Monetary Fund.Google Scholar
Kashyap, A., Berner, S.R. and Goodhart, C.A.E. (2011), ‘The macroprudential toolkit’, IMF Economic Review (forthcoming).CrossRefGoogle Scholar
Macroeconomic Assessment Group (2010), Assessing the Macroeconomic Impact of the Transition to Stronger Capital and Liquidity Requirements, Final Report, Bank for International Settlements, December.Google Scholar
Manning, M., Nier, E. and Schanz, J. (2009), The Economics of Large- Value Payment and Settlement: Theory and Policy Issues for Central Banks, Oxford University Press.Google Scholar
Merrouche, O. and Nier, E. (2010), ‘What caused the global financial crisis? Evidence on the build-up of financial imbalances 1999-2007’, IMF Working Paper 10/ 265, December.CrossRefGoogle Scholar
Nier, E. (2009), ‘Financial stability frameworks and the role of central banks: lessons from the crisis’, IMF Working Paper 09/70.CrossRefGoogle Scholar
Nier, E. and Baumann, U. (2006), ‘Market discipline, disclosure and moral hazard in banking’, Journal of Financial Intermediation, 15, pp. 333–62.CrossRefGoogle Scholar
Nier, E., Yang, J., Yorulmazer, T. and Alentorn, A. (2007), ‘Network models and financial stability’, Journal of Economic Dynamics and Control, 31, pp. 2033–2060.CrossRefGoogle Scholar
Nier, E. and Zicchino, L. (2008), ‘Bank losses, monetary policy and financial stability - evidence on the interplay from panel data’, IMF Working Paper 08/232.CrossRefGoogle Scholar
Perotti, E. and Suarez, J. (2010), ‘Regulation of liquidity risk’, mimeo, University of Amsterdam.Google Scholar
President's Working Group on Financial Markets (2010), Money Market Fund Reform Options, October.Google Scholar
Saurina, J. (2009), ‘Dynamic provisioning - the experience of Spain’, World Bank Crisis Response Note No. 7.Google Scholar
Shin, H.S. (2010), ‘Macroprudential policies beyond Basel III’, Policy Memo, Princeton University, November.Google Scholar
Viñals, J., Fiechter, J., Narain, A., Elliott, J.A., Tower, I., Bologna, P. and Hsu, M. (2010), ‘The making of good supervision: learning to say ‘No’’, IMF Staff Position Note No. 2010/08.Google Scholar
Wezel, T. (2010), ‘Dynamic loan loss provisions in Uruguay: properties, shock absorption capacity and simulations using alternative formulas’, IMF Working Paper 10/125.CrossRefGoogle Scholar
Whadwani, S. (2008), ‘Should monetary policy respond to asset price bubbles? Revisiting the debate’, National Institute Economic Review, October.CrossRefGoogle Scholar