Unpacking Macroprudential Policies

Unfortunately, we have an insufficient in that part of the world and learning about the understanding of the global transmission of overall impact of macroprudential instruments shocks that might emanate from manipulating remains a work in progress.4 But the introduction macroprudential instruments.6 The task is of macroprudential instruments elsewhere, notably complicated because if the authoriti [...] Hence, the failure to reach strong is the risk of a race to the bottom in the spread of conclusions, at an economy-wide level, about the a long list of policy instruments; this threatens effectiveness of macroprudential frameworks owes to reduce the transparency of the global financial as much to mis-measurement and complexity system.5 A false impression is given that the as it does to lingering u [...] While the BIS (2018, chapter IV) claims that and Williams 2011), meant that financial shocks, macroprudential policy strategies have made the especially from the large economies (that is, the financial system more resilient to the changes United States, the euro zone, Japan and, more since the end of the GFC, the same report goes on recently, China), were transmitted more quickly and to state that [...] Adding 15 Indeed, the tendency is to modify a standard Taylor rule by adding to the complexity of the problem is that the size and economic impact one or more determinants intended to capture the financial stability of these leakages is a function of the instrument in question. [...] Unpacking Macroprudential Policies: Strengths and Weaknesses 15 of the five cases shown, there is a significant The authors have also chosen to focus largely increase in the resort to macroprudential policies on institutional determinants because these during the period of the GFC.27 Changes in the are thought to be crucial for the success of any policy rate appear to complement domestically macro