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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.
Book Synopsis The Use and Effectiveness of Macroprudential Policies by : Mr.Eugenio Cerutti
Download or read book The Use and Effectiveness of Macroprudential Policies written by Mr.Eugenio Cerutti and published by International Monetary Fund. This book was released on 2015-03-17 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
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.
Book Synopsis Key Aspects of Macroprudential Policy - Background Paper by : International Monetary Fund. Fiscal Affairs Dept.
Download or read book Key Aspects of Macroprudential Policy - Background Paper written by International Monetary Fund. Fiscal Affairs Dept. and published by International Monetary Fund. This book was released on 2013-10-06 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
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.
Book Synopsis Macroprudential Policy - An Organizing Framework - Background Paper by : International Monetary Fund. Monetary and Capital Markets Department
Download or read book Macroprudential Policy - An Organizing Framework - Background Paper written by International Monetary Fund. Monetary and Capital Markets Department and published by International Monetary Fund. This book was released on 2011-03-14 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis The Use and Effectiveness of Macroprudential Policies: Variables Definitions and Sources; 1b. Regression Variables; 1c. Country Subgroup Classification; 2. Macroprudential Policy Variables; 3. Descriptive Statistics of Main Regression Variables; 4. Macroprudential Policies and Credit Growth: Main Regression Results; 5. Effects of Instrument by Subgroups; 6. Effects of Individual Instruments on Several Variables; 7. Effects on Cross-Border Credit Ratio by : Eugenio Cerutti
Download or read book The Use and Effectiveness of Macroprudential Policies: Variables Definitions and Sources; 1b. Regression Variables; 1c. Country Subgroup Classification; 2. Macroprudential Policy Variables; 3. Descriptive Statistics of Main Regression Variables; 4. Macroprudential Policies and Credit Growth: Main Regression Results; 5. Effects of Instrument by Subgroups; 6. Effects of Individual Instruments on Several Variables; 7. Effects on Cross-Border Credit Ratio written by Eugenio Cerutti and published by . This book was released on 2015 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:
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
Book Synopsis Staff Guidance Note on Macroprudential Policy by : International Monetary Fund
Download or read book Staff Guidance Note on Macroprudential Policy written by International Monetary Fund and published by International Monetary Fund. This book was released on 2014-06-11 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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
This paper assesses the effectiveness of lending restriction measures, such as loan-to-value and debt-service-to-income ratios, in affecting developments in house prices and credit. We use data on 99 lending standard restrictions implemented in 28 EU countries over 1990–2018. The results suggest that lending restriction measures are generally effective in curbing house prices and credit. However, the impact is delayed and reaches its peak only after three years. In addition, the impact is asymmetric, with tightening measures having weaker association with target variables compared to loosening measures. The association is stronger in countries outside of euro area and for legally-binding measures and measures involving sanctions. The results have practical implications for macroprudential authorities.
Book Synopsis How Effective is Macroprudential Policy? Evidence from Lending Restriction Measures in EU Countries by : Mr.Tigran Poghosyan
Download or read book How Effective is Macroprudential Policy? Evidence from Lending Restriction Measures in EU Countries written by Mr.Tigran Poghosyan and published by International Monetary Fund. This book was released on 2019-03-01 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper assesses the effectiveness of lending restriction measures, such as loan-to-value and debt-service-to-income ratios, in affecting developments in house prices and credit. We use data on 99 lending standard restrictions implemented in 28 EU countries over 1990–2018. The results suggest that lending restriction measures are generally effective in curbing house prices and credit. However, the impact is delayed and reaches its peak only after three years. In addition, the impact is asymmetric, with tightening measures having weaker association with target variables compared to loosening measures. The association is stronger in countries outside of euro area and for legally-binding measures and measures involving sanctions. The results have practical implications for macroprudential authorities.
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.
Book Synopsis Macro-Prudential Policies to Mitigate Financial System Vulnerabilities by : Mr.Stijn Claessens
Download or read book Macro-Prudential Policies to Mitigate Financial System Vulnerabilities written by Mr.Stijn Claessens and published by International Monetary Fund. This book was released on 2014-08-19 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
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.
Book Synopsis Systemic Risk, Crises, and Macroprudential Regulation by : Xavier Freixas
Download or read book Systemic Risk, Crises, and Macroprudential Regulation written by Xavier Freixas and published by MIT Press. This book was released on 2015-06-19 with total page 487 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Macroprudential policy focuses on the financial system as a whole, as distinct from individual institutions, and its objective is to limit the costs to the real economy from system-wide distress of the financial sector. This book offers a critical, contextual and comparative examination of the nature of macroprudential policy as an emerging legal domain. It explores why macroprudential policy is necessary and how best to design tailored legal, institutional and governance frameworks that support the various supervisory stages in macroprudential regimes. Questions addressed relate to the design of the macroprudential mandate and institutional structures, independence, transparency and accountability arrangements, the nature and limitations of macroprudential authorities' supervisory powers, as well as the challenges that are likely to be encountered during the generation, collection and analysis of data and the use of macroprudential tools. The book extends well beyond being a 'one-stop-shop' introduction on all aspects of macroprudential policy. It digs deeper and does the heavy lifting by analysing the unique features of macroprudential policy that set it apart from other policy areas; examining the pulling (and at times, contradicting) forces which affect it and surfacing its complex and evolutionary nature and the unique challenges confronting macroprudential authorities.In order to derive and capture the theoretical foundations of macroprudential policy and support the high-level suggestions made on how to operationalise it, the book draws on established scholarships from international law as well as theories developed in the Organisational Behaviour field. It presents and explains the law within the context of the most recent empirical research in economics, including research on the prevalent governance structure of macroprudential policy, its interaction with other policy areas and the effectiveness of macroprudential tools. The normative discussion in the book is also grounded in practical specificities through detailed critical analysis of macroprudential policy frameworks at the national level (UK and US), regional level (EU) and global level (FSB, IMF and BIS). Dr. Anat Keller is a Lecturer in Law at the Dickson Poon School of Law, King's College London, and a Research Fellow at the Centre for Data Analytics for Finance and Macroeconomics (DAFM) at King's Business School. She was previously a Teaching Fellow and a Visiting Lecturer in Law at University College London (2007-2016). She is also a qualified solicitor and serves as a Deputy Chief Examiner of the University of London. She is co-author of the book 'Law Relating to Financial Services' now in its 8th edition and has published numerous articles and chapters in peer-reviewed journals and edited collections focusing on macroprudential policy.
Book Synopsis Legal Foundations of Macroprudential Policy by : Anat Keller
Download or read book Legal Foundations of Macroprudential Policy written by Anat Keller and published by . This book was released on 2020 with total page 335 pages. Available in PDF, EPUB and Kindle. Book excerpt: Macroprudential policy focuses on the financial system as a whole, as distinct from individual institutions, and its objective is to limit the costs to the real economy from system-wide distress of the financial sector. This book offers a critical, contextual and comparative examination of the nature of macroprudential policy as an emerging legal domain. It explores why macroprudential policy is necessary and how best to design tailored legal, institutional and governance frameworks that support the various supervisory stages in macroprudential regimes. Questions addressed relate to the design of the macroprudential mandate and institutional structures, independence, transparency and accountability arrangements, the nature and limitations of macroprudential authorities' supervisory powers, as well as the challenges that are likely to be encountered during the generation, collection and analysis of data and the use of macroprudential tools. The book extends well beyond being a 'one-stop-shop' introduction on all aspects of macroprudential policy. It digs deeper and does the heavy lifting by analysing the unique features of macroprudential policy that set it apart from other policy areas; examining the pulling (and at times, contradicting) forces which affect it and surfacing its complex and evolutionary nature and the unique challenges confronting macroprudential authorities.In order to derive and capture the theoretical foundations of macroprudential policy and support the high-level suggestions made on how to operationalise it, the book draws on established scholarships from international law as well as theories developed in the Organisational Behaviour field. It presents and explains the law within the context of the most recent empirical research in economics, including research on the prevalent governance structure of macroprudential policy, its interaction with other policy areas and the effectiveness of macroprudential tools. The normative discussion in the book is also grounded in practical specificities through detailed critical analysis of macroprudential policy frameworks at the national level (UK and US), regional level (EU) and global level (FSB, IMF and BIS). Dr. Anat Keller is a Lecturer in Law at the Dickson Poon School of Law, King's College London, and a Research Fellow at the Centre for Data Analytics for Finance and Macroeconomics (DAFM) at King's Business School. She was previously a Teaching Fellow and a Visiting Lecturer in Law at University College London (2007-2016). She is also a qualified solicitor and serves as a Deputy Chief Examiner of the University of London. She is co-author of the book 'Law Relating to Financial Services' now in its 8th edition and has published numerous articles and chapters in peer-reviewed journals and edited collections focusing on macroprudential policy.
Macroprudential policies – caps on loan to value ratios, limits on credit growth and other balance sheets restrictions, (countercyclical) capital and reserve requirements and surcharges, and Pigouvian levies – have become part of the policy paradigm in emerging markets and advanced countries alike. But knowledge is still limited on these tools. Macroprudential policies ought to be motivated by market failures and externalities, but these can be hard to identify. They can also interact with various other policies, such as monetary and microprudential, raising coordination issues. Some countries, especially emerging markets, have used these tools and analyses suggest that some can reduce procyclicality and crisis risks. Yet, much remains to be studied, including tools’ costs ? by adversely affecting resource allocations; how to best adapt tools to country circumstances; and preferred institutional designs, including how to address political economy risks. As such, policy makers should move carefully in adopting tools.
Book Synopsis An Overview of Macroprudential Policy Tools by : Mr.Stijn Claessens
Download or read book An Overview of Macroprudential Policy Tools written by Mr.Stijn Claessens and published by International Monetary Fund. This book was released on 2014-12-11 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: Macroprudential policies – caps on loan to value ratios, limits on credit growth and other balance sheets restrictions, (countercyclical) capital and reserve requirements and surcharges, and Pigouvian levies – have become part of the policy paradigm in emerging markets and advanced countries alike. But knowledge is still limited on these tools. Macroprudential policies ought to be motivated by market failures and externalities, but these can be hard to identify. They can also interact with various other policies, such as monetary and microprudential, raising coordination issues. Some countries, especially emerging markets, have used these tools and analyses suggest that some can reduce procyclicality and crisis risks. Yet, much remains to be studied, including tools’ costs ? by adversely affecting resource allocations; how to best adapt tools to country circumstances; and preferred institutional designs, including how to address political economy risks. As such, policy makers should move carefully in adopting tools.
