Macroprudential Policy - An Organizing Framework - Background Paper
Macroprudential Policy - An Organizing Framework - Background Paper

Author: International Monetary Fund. Monetary and Capital Markets Department

Publisher: International Monetary Fund

Published: 2011-03-14

Total Pages: 33

ISBN-13: 1498339174

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MCM conducted a survey in December 2010 to take stock of international experiences with financial stability and the evolving macroprudential policy framework. The survey was designed to seek information in three broad areas: the institutional setup for macroprudential policy, the analytical approach to systemic risk monitoring, and the macroprudential policy toolkit. The survey was sent to 63 countries and the European Central Bank (ECB), including all countries in the G-20 and those subject to mandatory Financial Sector Assessment Programs (FSAPs). The target list is designed to cover a broad range of jurisdictions in all regions, but more weight is given to economies that are systemically important (see Annex for details). The response rate is 80 percent. This note provides a summary of the survey’s main findings.

Macroprudential Policy Framework
Macroprudential Policy Framework

Author: Damodaran Krishnamurti

Publisher: World Bank Publications

Published: 2014-05-14

Total Pages: 75

ISBN-13: 1464800855

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This publication aims to provide policy makers in emerging market and developing economies with inputs to better understand, envision, and implement a macroprudential policy framework. It presents the basic concepts, issues, and challenges, and encourages them to ask the right questions to design an optimal institutional framework,

Systemic Risk, Crises, and Macroprudential Regulation
Systemic Risk, Crises, and Macroprudential Regulation

Author: Xavier Freixas

Publisher: MIT Press

Published: 2015-06-19

Total Pages: 487

ISBN-13: 0262028697

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A framework for macroprudential regulation that defines systemic risk and macroprudential policy, describes macroprudential tools, and surveys the effectiveness of existing macroprudential regulation. The recent financial crisis has shattered all standard approaches to banking regulation. Regulators now recognize that banking regulation cannot be simply based on individual financial institutions' risks. Instead, systemic risk and macroprudential regulation have come to the forefront of the new regulatory paradigm. Yet our knowledge of these two core aspects of regulation is still limited and fragmented. This book offers a framework for understanding the reasons for the regulatory shift from a microprudential to a macroprudential approach to financial regulation. It defines systemic risk and macroprudential policy, cutting through the generalized confusion as to their meaning; contrasts macroprudential to microprudential approaches; discusses the interaction of macroprudential policy with macroeconomic policy (monetary policy in particular); and describes macroprudential tools and experiences with macroprudential regulation around the world. The book also considers the remaining challenges for establishing effective macroprudential policy and broader issues in regulatory reform. These include the optimal size and structure of the financial system, the multiplicity of regulatory bodies in the United States, the supervision of cross-border financial institutions, and the need for international cooperation on macroprudential policies.

Staff Guidance Note on Macroprudential Policy
Staff Guidance Note on Macroprudential Policy

Author: International Monetary Fund

Publisher: International Monetary Fund

Published: 2014-06-11

Total Pages: 45

ISBN-13: 1498342620

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This note provides guidance to facilitate the staff’s advice on macroprudential policy in Fund surveillance. It elaborates on the principles set out in the “Key Aspects of Macroprudential Policy,” taking into account the work of international standard setters as well as the evolving country experience with macroprudential policy. The main note is accompanied by supplements offering Detailed Guidance on Instruments and Considerations for Low Income Countries

Key Aspects of Macroprudential Policy - Background Paper
Key Aspects of Macroprudential Policy - Background Paper

Author: International Monetary Fund. Fiscal Affairs Dept.

Publisher: International Monetary Fund

Published: 2013-10-06

Total Pages: 64

ISBN-13: 1498341713

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The countercyclical capital buffer (CCB) was proposed by the Basel committee to increase the resilience of the banking sector to negative shocks. The interactions between banking sector losses and the real economy highlight the importance of building a capital buffer in periods when systemic risks are rising. Basel III introduces a framework for a time-varying capital buffer on top of the minimum capital requirement and another time-invariant buffer (the conservation buffer). The CCB aims to make banks more resilient against imbalances in credit markets and thereby enhance medium-term prospects of the economy—in good times when system-wide risks are growing, the regulators could impose the CCB which would help the banks to withstand losses in bad times.

Macro-Prudential Policies to Mitigate Financial System Vulnerabilities
Macro-Prudential Policies to Mitigate Financial System Vulnerabilities

Author: Mr.Stijn Claessens

Publisher: International Monetary Fund

Published: 2014-08-19

Total Pages: 36

ISBN-13: 1498357601

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Macro-prudential policies aimed at mitigating systemic financial risks have become part of the policy toolkit in many emerging markets and some advanced countries. Their effectiveness and efficacy are not well-known, however. Using panel data regressions, we analyze how changes in balance sheets of some 2,800 banks in 48 countries over 2000–2010 respond to specific macro-prudential policies. Controlling for endogeneity, we find that measures aimed at borrowers––caps on debt-to-income and loan-to-value ratios––and at financial institutions––limits on credit growth and foreign currency lending––are effective in reducing asset growth. Countercyclical buffers are little effective through the cycle, and some measures are even counterproductive during downswings, serving to aggravate declines, consistent with the ex-ante nature of macro-prudential tools.

Macroprudential Policy
Macroprudential Policy

Author: International Monetary Fund

Publisher: International Monetary Fund

Published: 2011-10-01

Total Pages: 85

ISBN-13: 1463922604

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This paper provides the most comprehensive empirical study of the effectiveness of macroprudential instruments to date. Using data from 49 countries, the paper evaluates the effectiveness of macroprudential instruments in reducing systemic risk over time and across institutions and markets. The analysis suggests that many of the most frequently used instruments are effective in reducing pro-cyclicality and the effectiveness is sensitive to the type of shock facing the financial sector. Based on these findings, the paper identifies conditions under which macroprudential policy is most likely to be effective, as well as conditions under which it may have little impact.

The Use and Effectiveness of Macroprudential Policies
The Use and Effectiveness of Macroprudential Policies

Author: Mr.Eugenio Cerutti

Publisher: International Monetary Fund

Published: 2015-03-17

Total Pages: 43

ISBN-13: 1498316379

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Using a recent IMF survey and expanding on previous studies, we document the use of macroprudential policies for 119 countries over the 2000-13 period, covering many instruments. Emerging economies use macroprudential policies most frequently, especially foreign exchange related ones, while advanced countries use borrower-based policies more. Usage is generally associated with lower growth in credit, notably in household credit. Effects are less in financially more developed and open economies, however, and usage comes with greater cross-border borrowing, suggesting some avoidance. And while macroprudential policies can help manage financial cycles, they work less well in busts.

Institutional Models for Macroprudential Policy
Institutional Models for Macroprudential Policy

Author: Erlend Nier

Publisher: International Monetary Fund

Published: 2011-11-01

Total Pages: 26

ISBN-13: 1463926537

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Staff Discussion Notes showcase the latest policy-related analysis and research being developed by individual IMF staff and are published to elicit comment and to further debate. These papers are generally brief and written in nontechnical language, and so are aimed at a broad audience interested in economic policy issues. This Web-only series replaced Staff Position Notes in January 2011.