Macroprudential and Microprudential Policies: Toward Cohabitation

Osinski, Jacek; Seal, Katharine; Hoogduin, Lex

doi:10.5089/9781484369999.006

Cited by 50 publications

(41 citation statements)

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“…Macroprudential policies presume effective microprudential regulation and supervision. Most often, when conducted properly microprudential objectives will be aligned with macroprudential policies, but there can be conflicts (Osiński, Seal, and Hoogduin, 2013;Angelini, Nicoletti-Altimari, and Visco, 2012). This is most clear in bad times when a macroprudential perspective may suggest relaxing regulatory requirements -as they impede the provision of credit to the economy or contribute to fire-sale effects, while the microprudential perspective may seek to retain or tighten requirements -so as to protect the interest of depositors of individual banks or investors.…”

Section: B Interactions With Other Policiesmentioning

confidence: 99%

An Overview of Macroprudential Policy Tools

2014

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Macroprudential policies -caps on loan to value ratios, limits on credit growth and other balance sheets restrictions, (countercyclical) capital and reserve requirements and surcharges, and Pigouvian levies -have become part of the policy paradigm in emerging markets and advanced countries alike. But knowledge is still limited on these tools. Macroprudential policies ought to be motivated by market failures and externalities, but these can be hard to identify. They can also interact with various other policies, such as monetary and microprudential, raising coordination issues. Some countries, especially emerging markets, have used these tools and analyses suggest that some can reduce procyclicality and crisis risks. Yet, much remains to be studied, including tools' costs  by adversely affecting resource allocations; how to best adapt tools to country circumstances; and preferred institutional designs, including how to address political economy risks. As such, policy makers should move carefully in adopting tools. JEL Classification Numbers: E43, E58, G18, G28

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Section: B Interactions With Other Policiesmentioning

confidence: 99%

An Overview of Macroprudential Policy Tools

2014

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“…1 I consider microprudential instruments as those that focus on the health of individual financial institutions, and macroprudential policy tools as those that address risks to the financial system as a whole (for a definition, see Osinski et al 2013).…”

Section: Macroprudential Policy Toolkitmentioning

confidence: 99%

Macroprudential Policy: A Blessing or a Curse?

Popoyan

2016

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractAfter the destructive impact of the global financial crisis of 2008, many believe that pre-crisis financial market regulation did not take the "big picture" of the system sufficiently into account and, subsequently, financial supervision mainly "missed the forest for the trees." As a result, the need for macroprudential aspects of regulation emerged, which has recently become the focal point of many policy debates. This has also led to intense discussion on the contours of monetary policy after the post-crisis "new normal." Here, I review recent progress in empirical and theoretical research on the effectiveness of macroprudential tools, as well as the current state of the debate, in order to extract common policy conclusions. The work highlights that, despite the achievements in the literature, the current experience and knowledge of how macroprudential instruments work, their calibration, and the mechanisms through which they interact with each other and with monetary policy are rather limited and conflicting. Moreover, I critically survey and note the current challenges faced by macroprudential regulation in creating stable, yet efficient financial systems. At the same time, I emphasize the importance of accepting that many risks may remain, requiring that we proceed prudently and develop better plans for future crises.

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“…Researchers from the IMF (Osiński, Seal, and Hoogduin, 2013) tend to view the MPM as a right for macroprudential policy. A group of researchers under the Governor of the Swedish Riksbank proceeded from the same understanding (2011).…”

Section: іі Defining the Macroprudential Mandate: Literature And Recmentioning

confidence: 99%

Institutional Set-Up and Mandates of Macroprudential Authorities:International Experience and Benchmarks for Ukraine

Danylenko¹,

Sanzharovska²

2016

Visn. Nat. Bank Ukr.

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Defining macroprudential authority is one of the key steps in ensuring financial stability. Within the framework of general principles defined by international institutions lie various versions of macroprudential architectures realized by individual І. IntroductIonDemand from businesses and the public for financial stability was a legitimate reaction to the global crisis of 2007-2009. We see "financial stability" as a state in which the financial system is capable of performing its key functions efficiently and smoothly, i.e. financial intermediation and arrangement of payments, thus contributing to sustainable economic growth and resilience to crises' impact on economy. Or, as Garry J. Schinasi (2006) summed it up, many researchers define financial stability as the "absence of financial instability."In order to achieve financial stability, appointed (or newly established) authorities design and implement macroprudential policy (MPP). In other words, the authorities execute a macroprudential mandate (MPM). As we speak of public authorities, their objectives and rights should be laid down in laws (or other legal acts or regulations) according to the basic principle of public law: a public authority can do only those things that it is allowed to do by a body of laws.Through the last decade, both developed and emerging market countries searched for the optimal framework of bodies responsible for financial stability and reflect this solution in legal acts. It is hard to evaluate these solutions yet: the time that has passed since their implementation is usually too short.2 Additionally, there are no commonly accepted units or systems to measure financial stability.1 Also referred to as bank-centric; that is, banks control the prevailing share in the financial system assets, dominate on capital markets, and distribute the largest proportion of savings in the economy. 2 There have been certain works lately dedicated to attempts to measure MPP efficiency. The authors tended to concentrate so far mostly on analysis of individual country experiences or efficiency of certain instruments. However, there a new works (Bruno, Shim, and Shin (2015) and Akinci and Olmstead-Rumsey (2015)) that indicate the topic drives attention and is promising for further research.

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Macroprudential and Microprudential Policies: Toward Cohabitation

Cited by 50 publications

References 10 publications

An Overview of Macroprudential Policy Tools

An Overview of Macroprudential Policy Tools

Macroprudential Policy: A Blessing or a Curse?

Institutional Set-Up and Mandates of Macroprudential Authorities:International Experience and Benchmarks for Ukraine

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