Towards a Macroprudential Policy in the EU: Main Issues

Abstract

The aim of the paper is to analyze the state of the art of macroprudential policies (MAP) with a focus on the case of the European Union. To this end the institutional framework of MAP is introduced and discussed with regard to several issues: the relationships and/or the conflicts with other policies and among the different institutional bodies involved, their mandate, accountability and governance. The operative framework -intermediate and final targets and toolkit -is specifically analyzed with regard to the case of the European Union and the introduction, in 2011, of a macroprudential supervisory pillar based on the European Systemic Risk Board (ESRB). Finally the main features of the new European supervisory architecture are addressed: the organization of MAP within the Single Supervisory Mechanisms (SSM), the definition of the role of the European Central Bank (ECB) and of the ESRB as far as macroprudential policy is concerned. In the conclusions, we evaluate the new architecture which is quite complex and cumbersome, and the challenge that the SSM is facing: to achieve comprehensive, rational, effective and efficient supervision, avoiding overlapping of competences and clarifying the specific roles of different bodies while keeping away additional burdens for the institutions supervised.

Monitoring Systemic Risk A Survey of the Available Macroprudential Toolkit

“…However, for macroprudential policies to be effective, the major challenge left appears no longer to be theoretical or technical. By itself, the efficient monitoring of systemic risk is unable to deliver suggestions either in the dominion of policies (the issues of when and how macroprudential action must be put in place) or in that of institutions (the issue of who is in charge of taking decisions) [Gualandri, Noera 2014b].…”

Taming macroeconomic instability: Monetary and macro-prudential policy interactions in an agent-based model

“…Given the numerous faults in the global regulatory framework and in banks' risk management practices, a growing consensus has grown to improve macro prudential regulatory tools in order to better supervise the banking sector and tame financial market instability (Borio 2011, Blanchard et al 2013, Zhang & Zoli 2014, Blundell-Wignall & Roulet 2014, Gualandri & Noera 2014. The policy debate is focusing in particular on the adoption, implementation and effectiveness of different macro prudential tools (Balasubramanyan & VanHoose 2013, Claessens et al 2013, Miles et al 2013, Aiyar et al 2014, Cerutti et al 2015, as well as on their impact on macroeconomic outcomes and their relationship with monetary policy (Beau et al 2012, Kannan et al 2012, Agénor et al 2013, Angeloni & Faia 2013, Lambertini et al 2013, Spencer 2014, Suh 2014).…”