Belgium: Financial Sector Assessment Program-Technical Note on Macroprudential Policy Framework and Tools

International Monetary Fund

No 2023/392, IMF Staff Country Reports from International Monetary Fund

Abstract: This technical note discusses macroprudential policy framework and tools in Belgium. The macroprudential policy framework could be strengthened along several dimensions. The government should publish its rationale for macroprudential policy decisions, including in the case of inaction to enact such instruments through Royal decree. Communication by the National Bank of Belgium (NBB) on some of its macroprudential tools is strong but hampered for other instruments by the need to obtain government approval before decisions can be conveyed to a wider audience. The NBB should strengthen its systemic risk assessment framework by closing gaps and ensuring stronger integration of data and quantitative tools with instrument design and selection. A more holistic and structural approach should be contemplated to better gauge the transmission of macro-financial risks to individual financial intermediaries and to better detect financial sector spillovers. Switching to a positive neutral rate could facilitate Countercyclical capital buffer activation in an environment of repeated economic shocks and high macro-financial uncertainty. In view of the sizeable exposures of banks to Commercial real estate risk, a dedicated buffer to absorb potential losses if credit impairments materialize should be contemplated once the necessary elements for appropriate Sectoral systemic risk buffer calibration are in place.

Keywords: mortgage market characteristic; coverage ratio; housing loan; bank funding; bank CRE exposure; NBB proposal; Macroprudential policy; Financial sector stability; Financial sector risk; Systemic risk; Macroprudential policy instruments; Global; Europe (search for similar items in EconPapers)
Pages: 48
Date: 2023-12-08
New Economics Papers: this item is included in nep-cis, nep-eur, nep-inv and nep-ure
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=542169 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfscr:2023/392

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Staff Country Reports from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().