European macroprudential policy from gestation to infancy

Ignazio Angeloni ()

Financial Stability Review, 2014, issue 18, 71-84

Abstract: The launch of the Single Supervisory Mechanism and the new European legislation on micro and macroprudential instruments (Capital Requirements Directive IV and Capital Requirements Regulation) open important new prospects for banking supervision in Europe. This article reviews opportunities and challenges created by these changes. The new policy framework should decisively contribute, over time, to financial stability in the continent, also by providing tools to address country specific macrofinancial developments that are not easily tackled in a single currency area. For this to happen, it is essential that actions by the European Central Bank and by the national authorities be effectively coordinated. Micro and macroprudential instruments should coherently focus on promoting financial stability. Credit micro-management, influencing the sectorial allocation of credit or reintroducing a national dimension in monetary control, should be avoided. Moreover, the analytical base of macroprudential policy is still partially developed; more work and experience are needed before macroprudential policy can occupy a central role in the European economic policy landscape.

Date: 2014
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