Macroprudential space and current policy trade-offs in the euro area

Matthieu Darracq Paries, Stephan Fahr and Christoffer Kok

Financial Stability Review, 2019, vol. 1

Abstract: The countercyclical capital buffer (CCyB) is one of the centrepieces of the post-crisis reforms that introduced macroprudential policy instruments and aims to protect the resilience of the financial system. As only a few euro area countries have activated the CCyB, macroprudential authorities currently have limited policy space to release buffer requirements in adverse circumstances. This special feature provides insights into the relevant macroprudential policy response under different macroeconomic conditions and a gradual build-up of cyclically adjustable buffers could be considered to help create the necessary macroprudential space and to reduce the procyclicality of the financial system in an economic and financial downturn. JEL Classification: E58, G18, G28

Keywords: capital requirements; countercyclical buffer; Macroprudential policy; monetary policy; policy trade-offs; policy transmission (search for similar items in EconPapers)
Date: 2019-05
Note: 604093
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Citations: View citations in EconPapers (6)

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