Macroprudential Policy at the ECB: Institutional Framework, Strategy, Analytical Tools and Policies

Cabral, Inês; Detken, Carsten; Fell, John; Henry, Jérôme; Hiebert, Paul; Kapadia, Sujit; Pires, Fatima; Salleo, Carmelo; Constâncio, Vítor; Altimari, Sergio Nicoletti

doi:10.2139/ssrn.3424161

Cited by 16 publications

(14 citation statements)

References 27 publications

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“…Furthermore, at the supranational level, the European Systemic Risk Board (ESRB), set up in 2011 as an extension of the ECB, was to monitor systemic risks and issue warnings and recommendations to national authorities, another sign of technocrats' strong sway of over macroprudential policies (McPhilemy, 2016). In this way, the ESRB was to limit domestic regulators' "inaction bias," particularly with respect to delicate asset classes such as real estate (ECB, 2019;Schammo, 2019).…”

Section: Marrying Expertise and Politics Through Fscsmentioning

confidence: 99%

“…While many EU member states introduced them in national legislation, they were often placed outside of financial supervisors' purview (Hartmann, 2016). This follows a general trend: as macroprudential policy has potentially significant distributional consequences, politicians have been reluctant to fully exclude themselves from the decision-making process (Edge & Liang, 2019;Moschella & Pinto, 2021).…”

Section: Marrying Expertise and Politics Through Fscsmentioning

confidence: 99%

“…In macroprudential policy, however, many countries have opted for a-to our knowledge-novel institutional solution: financial stability committees (FSCs). These unite the relevant ministry (usually the Ministry of Finance) and financial regulators (specifically central banks) to deliberate over these policies and-depending on the governance set-up-enact them (Edge & Liang, 2019). 1 While the creation of such committees partly reflected systemic risks' cross-cutting nature, they also constituted a way to bring together "politics" and "expert governance."…”

Section: Introductionmentioning

confidence: 99%

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Between technocracy and politics: How financial stability committees shape precautionary interventions in real estate markets

Thiemann

Stellinga

2022

Regulation & Governance

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Implementing precautionary measures that have obvious distributional consequences today but often only invisible future benefits is politically difficult. It requires that policymakers reconcile technocratic expertise with political consent. This paper traces attempts to enact such measures, focusing on countercyclical policies to limit the systemic risks of housing booms as proposed by financial stability committees in Germany, France, and the Netherlands from 2015 onwards. These committees bring together technocrats and political authorities in order to overcome the inaction bias inherent to these measures, seeking to forge both epistemic and political consensus on the need for action. We find that the work of these committees is characterized by lengthy processes of consensus‐building, during which technocrats amass evidence and search for politically acceptable solutions. We argue that whether this leads to meaningful steps crucially depends on the committee's institutional set‐up. What particularly matters is its capacity to engage the Ministry of Finance in binding discussions and the governance arrangements for the activation of precautionary instruments, which shape whether a shared framing of the problem and appropriate response emerges.

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Section: Marrying Expertise and Politics Through Fscsmentioning

confidence: 99%

Section: Marrying Expertise and Politics Through Fscsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Between technocracy and politics: How financial stability committees shape precautionary interventions in real estate markets

Thiemann

Stellinga

2022

Regulation & Governance

View full text Add to dashboard Cite

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“…One of the tasks of macroprudential policy is to track the cyclical systemic risks and estimate the economy's position within the financial cycle (Constâncio et al, 2019). The reasoning is that such information is used to assess the macroprudential policy stance based on the information on existing risks, the resilience of the financial system, and the policy itself.…”

Section: Introductionmentioning

confidence: 99%