Macro-prudential

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Working Paper

Will macroprudential policy counteract monetary policy’s effects on financial stability?

How does monetary policy impact upon macroprudential regulation? What are the effects on financial stability? This working paper models monetary policy’s transmission to bank risk taking, and its interaction with a regulator’s optimization problem.

By: Itai Agur and Maria Demertzis Topic: Finance & Financial Regulation Date: January 24, 2018
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Blog Post

Macroprudential policy: The Maginot line of financial stability

The ability of macroprudential policies to assure financial stability and thus leave central banks free to assign the interest rate tool exclusively to price stability is unproven. As the Maginot line did not protect France from a German invasion in WWII, so macroprudential policy may not be sufficient to counter financial instability. Central banks should prepare to deal with dilemmas in the use of the interest rate.

By: Francesco Papadia Topic: European Macroeconomics & Governance Date: January 17, 2018
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Blog Post

The political economy of macroprudential policy

What’s at stake: the emergence of renewed interest in macroprudential policy has characterised the aftermath of the great recession. There is not yet full agreement on what the tasks of macroprudential policy is or how it should be carried out, but there is a clear understanding that there is an important political economy dimension to it. We review some of the recent contribution on this.

By: Silvia Merler Topic: European Macroeconomics & Governance Date: December 12, 2016
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Blog Post

A financial side to a macroeconomic story: macro imbalances and financial integration in the euro area

In a recent paper, I looked at the evolution of financial cycles in the euro area and at their link with capital flows. Here, I focus on how those findings inform our understanding of euro-area macroeconomic imbalances, revisiting the analysis of national savings and investment correlation.

By: Silvia Merler Topic: European Macroeconomics & Governance Date: January 18, 2016
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Past Event

Past Event

Central banking after the great recession

Have Central Banks lost their ability to control domestic inflation? Are macroprudential tools sufficient to ensure financial stability? Do new monetary tools, a closer relationship with fiscal policy and the renewed financial stability mandate require a new central banking paradigm?

Speakers: Ignazio Angeloni, Markus K. Brunnermeier, Claudia M. Buch, Grégory Claeys, Charles Goodhart, Dirk Schoenmaker, Andrzej Rzońca, Cecilia Skingsley and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: January 18, 2016
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Working Paper

Macroprudential supervision: from theory to policy

While there is now consensus that financial supervision has to focus on the aggregate (macroprudential), in addition to the individual (microprudential), there is no agreed macroprudential framework for measuring financial imbalances and applying policies to correct such imbalances. This paper focuses on these two open questions in the so-called time dimension of macroprudential policy.

By: Dirk Schoenmaker and Peter Wierts Topic: Finance & Financial Regulation Date: November 25, 2015
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Blog Post

Capital flows, financial cycles, and macro-prudential policy in the euro area

The financial crisis has prompted a renewed interest in macro-prudential policy as a framework to address the stability of the financial system as a whole. While being an objective of global relevance, preserving financial stability is even more important in contexts in which financial linkages are strong and deep, such as in the Euro area.

By: Silvia Merler Topic: Finance & Financial Regulation Date: November 18, 2015
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Working Paper

Squaring the cycle: capital flows, financial cycles, and macro-prudential policy in the euro area

The financial crisis has prompted a renewed interest in macro-prudential policy as a framework to address the stability of the financial system as a whole, rather than only its individual components. The purpose of this paper is to contribute to the European macro-prudential discussion by establishing empirically the special challenges that the set-up of macro-prudential policy in the euro area needs to confront.

By: Silvia Merler Topic: Finance & Financial Regulation Date: November 18, 2015
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Blog Post

Foreign loan hangovers and macro-prudential measures in Central Eastern Europe

The Swiss’ national banks’ decision to end the peg to the Euro in January 2015 put again spotlights on the foreign currency loan overhang in CEE. This blog describes the extent of the foreign exchange borrowing and the respective macro-prudential provisions adopted in recent years.

By: Pia Hüttl Topic: European Macroeconomics & Governance Date: October 14, 2015