Macroprudential Policy: A Silver Bullet or Refighting the Last War?

Claude Lopez, Donald Markwardt and Keith Savard

MPRA Paper from University Library of Munich, Germany

Abstract: As many central banks contemplate the normalization of monetary policy, their focus is turning to the promise of macroprudential policy as a tool to manage possible future systemic risk in financial markets. Janet Yellen and Mario Draghi, among others, are pinning much of their hopes for managing financial stability in the context of Basel III on macroprudentialism. Despite central banks’ clear intention that this policy will play a significant role in developed economies, few policymakers or financial players know what macroprudential policy is, much less how to assess its efficacy or necessity. Our report aims to clarify the concept of macroprudential policy for a broader audience, cultivating a better understanding of these tools and their implications for broader monetary policy going forward. The report also advocates the use of more refined indicators for financial cycles as benchmarks for policy discussions on macroprudential policy.

Keywords: macroprudential policy; non-core liabilities; Basel III (search for similar items in EconPapers)
JEL-codes: E6 F3 (search for similar items in EconPapers)
Date: 2015-05
New Economics Papers: this item is included in nep-ban, nep-cba, nep-mac, nep-mon and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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https://mpra.ub.uni-muenchen.de/64825/8/MPRA_paper_64825.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/64993/1/MPRA_paper_64993.pdf revised version (application/pdf)

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