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Macroprudential Policy - Taxonomy and Challenges

Published online by Cambridge University Press:  26 March 2020

Erland W. Nier
Erland W. Nier*
Affiliation:
International Monetary Fund
*
e-mail ENier@imf.org
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Abstract

There is increasing recognition that prior to the global financial crisis financial regulation had lacked a macroprudential perspective. There has since been a strong effort to make a new macroprudential orientation operational, including through the establishment of new macroprudential authorities or ‘committees’ in a number of jurisdictions. These developments raise — and this paper explores — the following three questions. First, what distinguishes macroprudential policy from microprudential policy and what are its key tasks? Second, what powers should be given to macroprudential authorities and what should be their mandate? Third, how can governance arrangements ensure that macroprudential policies are pursued effectively? While arrangements for macroprudential policy will to some extent be country-specific, we identify three basic challenges in setting up an effective macroprudential policy framework and discuss options to address them.

Keywords

Macroprudential policysystemic riskgovernance
Type
Research Articles
Information
National Institute Economic Review , Volume 216 , April 2011 , pp. R1 - R15
Copyright
Copyright © 2011 National Institute of Economic and Social Research

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Footnotes

∗

This article is a revised version of a paper given at the IMF/Federal Reserve Bank of Chicago conference on 'Macroprudential Regulatory Policies: The New Road to Financial Stability' in September 2010. I would like to thank the editor, Ray Barrell, for his comments, and Karl Habermeier, Luis Jacome and Jacek Osinski for stimulating discussion. The views contained in this paper are those of the author and do not necessarily represent those of the IMF, its management or executive board.

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